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Maximizing Profits In Market Structures Paper

563 words - 3 pages

Week 3:
Forum Question 1
 
Why do some workers make more money than others? Must everyone make the same wage? Explain your answers using labor market equilibrium.
 
Your answer should be 200 to 300 words.
Some workers make more money than others for various reasons, such as the type of work being preformed, the required skill-set for the work, training, experience, quality of work, etc. A workers wages are only justifiable if the value of the work they are required to do equals the wage. No one would argue that a cook at a fast-food restaurant should have the same wages as a neurosurgeon; the two jobs are entirely different and require completely different skill sets, education, training, and knowledge. Therefore, not everyone should make the same wage, even workers in the same position should not be paid the ...view middle of the document...

Firms cannot allow wages to become a burden on the company; consequently, if the demand for the good or service that the worker is producing decreases the equilibrium is off and must be correct, typically through a reduction in wages or workforce.
Forum Question 2
 
Imagine that you are a business owner. Choose whether to hire a new person in the marketing department or upgrade your computer system. Each choice requires the same amount of investment. Address the following topics: What factors do you use to determine whether to invest in the additional capital and labor.
 
Your answer should be 200 to 300 words.
If I were a business owner faced with the decision to either hire a new employee or upgrade a computer system I would likely upgrade the computer system. Although the initial investment may be very similar it is likely that the productivity of the computer system will far exceed that of the new employee. Additionally, the ongoing costs of a new employee will exceed the initial costs of the computer system. The cost of wages for the number of years the employee will be with the company, with the additional costs of insurance, taxes, additional HR workload, payroll, etc. The long term benefits of hiring a new employee are simply dwarfed by the long term benefits of upgrading the computer system. The computer system will of course require a systems administrator. However, assuming the company currently has computer systems in place the act of upgrading an existing system would not adversely affect the productivity of the systems administrator, nor should it increase the workload of that employee.
In these tough economic times it would be difficult to remove the human element from this decision, but the profitability and stability of the company would be the primary objective. While computers and software can never replace all workers, they can be used in concert with workers in various fields to increase productivity and efficiency.

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