Are the statements in the paragraph below correct or incorrect? Explain.

Labour economics

Word limit: 1000 (10% above this word limit is acceptable)

Question

Are the statements in the paragraph below correct or incorrect? Explain.

The answer must include one mathematical expression, and not more than one.

“Consider the Burdett-Mortensen model of on-the-job search studied in lectures. If the assumption of on-the-job search is removed, then it is not possible to write a correct equal profits condition. As a result, the equilibrium wage distribution would be very different, although it may still have a range of wages in its support”.

Guidance

The use of variables and functions that are not explicitly defined does not constitute a mathematical expression. For example:

1. “Variable c denotes total consumption” does not constitute a mathematical expression.

2. “The consumption function is given by 0(c)” does not constitute a mathematical expression.

3. “The consumption function is given by 0(c) = ac + b” constitutes a mathematical expression.

4. “The consumption function is given by ac+ b” constitutes a mathematical expression”

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