The decision whether to work at any given wage is an application of the?

Question

The decision whether to work at any given wage is an application of the

A. scarcity principle.

B. equilibrium principle.

C. principle of increasing opportunity cost.

D. principle of comparative advantage.

E. cost-benefit principle.

Answer 1

B. equilibrium principle.

Answer 2

ll principle may be relevant. But I vote for cost beneft  and scarcity principles implicit in the equilibrium principle.

One would work at a given wage is dependent on the comparision of the wages received and the pains from the work. The pains from the work may be the opportunity cost (income forgone from lternative employment or happiness foregone from enjoying liesure.). Ultimately, the number of hours a person can work per day/ per month is fixed. So the hours worked is scare (24 hours, 7 days a week maximum).

In equlibrium, a person dcides to work fior an extra hour of work till the wage rate is greater than or equal to the happiness forgone from leisure. When the wage rate is equal to marginal cost in terms of happiness lost or opportunity cost, the worker is in equilibrium. He would work where his comparative adbvantage is the highest and get paid accordingly at the highest wage.