9058009888

CHAPTF.R TTT

41

86230

rewnrdfi    a«8oc1nt.«(i wlt.h t.ha const.nict.1on o f a propor

negot.lfltion s e t. - u p .

9 . A er 11.1 ca 1 appr a 1 s a 1 of Htgndardnngt/benpflr. nnw 1 y s 1 s .

As ant. 1 o i pa t.ed , wc will .st.t.fiipt., 1n the reiatnlng saot.lons of t.hls ohapt.er, to reconclls t.ha wacroenonon 1 o reasoning of sectlona 1-4 wit.h t.ha proł>1a« of t.ha orlt.arla for evaluat.1ng pobiło actlons 1nvolv1ng add 11.1 ona 1 • oip 1 oywan t..

Can    we aocapt., włthont.    . furt.hor ..    qnal 1f loat.lons,    t.he

propor1.1 ona 1 1 ty condj 1.1 on ma    st.at.ad    . I n    saot.lon 3 abova    as

heing ¹ anff 1 ciant.¹ for preferrlng t.ha aost. prodnot.1va st.rat.agy 2 ? Tn order to say t.hat. a s 1 t. u a 1.1 o n 1 s bat. tar t.han anot.har ona, 1 s    1t. really snffldant. t.hat.    t.ha    laval of oiit.put    1s

lar gar?    Won ld we raally ha    ready    tri    aocapt. any rata    of

unewp 1 oywent. In order to have wora nntpiit.?

No po 11 oy waker -we bel1ava- • won Id dara to . prov1da a s t. ra 1 gh t. f orward pos1t.1ve answer to t.he abova quast.1ons. Though, t.he very sawe polloy aaker would ha 1 łkały t.o refuae a job oraat.łon projeot., t.ha henaf1t./oost. rat. io of whtoh 1s, for axawple, 0.99. Rut. how t.he oost.s and banafłt.s are co w pn t.ed, aven aooordlng t.o mir best. ooat.-heneflt. ordłnary t.eohniqnes?

Here 1s t.ha answer,. st.at.ad 1n t.ha s 1 w p 1 e s t. posslble languaga. Suppo.se we have a projeot. t.hat. requ1ras - 1n order t.o produoe a g1ven result R- to buy oart.aln łnput.s T on t.ha larket., at. a prłoa p(T), to hlra a nuwber of we l 1 t.ratned engłnears NI, at. the waga of wl, and a nuwber N2 of tinskłlled workers, at. t.ha waga of w2. Snppose f nr t.her lor a, for t.he saka of s 1 ip 1 1 o 1 ty , t.hat engłnears ara fnlly ewployed, wh 1 1 a liński 1 lad workers face a vary high rata of unewp 1 oywent., and t.hat., for sowa oonstralnt., t.ha preaenf. produot. łon of T oannot. ba Inoraasad, so t.hat., ł n order to-sell 1t. t.o t.ha projeot., it. fal la t.o ba sold elsewbara. The Mnandal oost. of t.ha projeot. w1 1 1 t.hna be

FC - p ( T ) T^ł w1 N1 + w2 N2    [7]

The real oost., however, would in t.hla oase be dlfferant., slnoa the unskł 1 lad workers ara unewployed. Thua, whlla t.he hlrlng of englnaers will dat. ani na a loss of produot łon In t.ha syst.ew (slnoa, halng fnlly eaployad, t.hay ara wlt.hdrawn frow sowa ot.har jobs and they oan no longar produoe what. t.hay produoed 1n suoh jobs), and whlla t.ha łnput.s T have a weanlng in t.arws of raal oost.s (slnoa t.hay oan no longar ba u sad as t.hay wara prav1ously), t.ha hlrlng of unsklllad workers doas not. łwply any loss In production,    slnoa (and łn so far as)

t.hay wara not. produclng anyt.hlng.    (Th1s 1s t.rne only 1f

unawployad do not. raally produoe anyt.hlng. Tf t.hera exlst.s a 'dlsguisad' production, t.hera 1s also a loss In nnofflolal production. T t. way ba very dlfflonlt. to ast.łwat.a snob a* loss, hut t.ha point. 1s ralavant. also for t.ha affaot.s on t.ha supply o f 1abour.)