f4 econ question (new introductory economics 2 chapter 8)
Mr Wong runs a garment factory which produces a maximum of either 1000 dozen T-shirts or 600 dozen shirts a month. He pays his workers $50 for every dozen T-shirts produced. He also employs a clerk at a monthly salary of $8000.
1. Why can't he produce 1100 dozen T-shirts in a month?(3marks)
2. Name the factor return that Mr Wong gets from the production. Give TWO differences between this return and the wages he pays his employees.(5marks)
- DannyLv 61 decade agoFavorite Answer
1. It is due to scarcity. People always want more goods to be produced to satisfy more wants. They just can't because resources are limited and just insufficient to satisfy unlimited human wants.
2. Mr Wong gets profit. Wage is (1) fixed (with progression sometimes of course) and (2) relatively risk-free (unless the company shuts down) while profit is (1) variable. It (2) bear risk because it varies with the performance of the company. Profit can even be negative.