Question

multiple choice question
what must be done by employers to induce people who are not currently in the labor force to seek employment?
o pay wages equal to mrp
o establish labor unions
o pay higher wages
o pay wages equal to the marginal product of labor

Explanation:

People not in the labor force have certain reservation wages (the minimum wage they would accept to work). Employers need to offer wages that exceed these reservation wages. Paying higher wages makes work more attractive compared to non - labor force activities (like leisure, home production etc.). Paying wages equal to MRP (marginal revenue product) is a profit - maximization condition for firms in a competitive labor market but doesn't directly address inducing non - labor force participants. Establishing labor unions may have various effects like collective bargaining for existing workers but not specifically for inducing new entrants. Paying wages equal to the marginal product of labor (in a competitive product market, MRP = P×MPL where P is price and MPL is marginal product of labor) is again a firm's profit - maximization rule for hiring existing workers.

Answer:

Pay higher wages