Tuesday, 17 November 2009

CFA Studying by one of the guys at work

This is the best CFA studying excerpt I've heard in a long time, man I love the basic tenants of labour economics. This is investment banking in a nutshell:

"Each individual decides whether, and how much, to work. Typically, labour has disutility; people generally prefer less work (and more leisure). Employers must offer a wage rate high enough that workers give up leisure time in favour of employment. Wages, then, are the opportunity cost of leisure. The higher the wage rate, the more hours of leisure a worker will forego and the more hours of labour he will supply. This is the substitution effect in labour supply: workers substitute labour for leisure to the extent the wage rate is high enough to give them an incentive to do so. At some point, however, an individual reaches a maximum amount of labour that he is willing to offer for any wage."

Classic!

3 comments:

  1. I suppose for 'the masses' this may apply. As for myself, I took a $100,000 a year cut in pay, to pursue education, further knowledge development, remain creative and challenged, despite my financial losses.

    And yet I still have the same amount, if not more, leisure time.

    ? Am I an anomoly

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  2. ..don't answer that.. somebody will say , no you're an idiot.

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  3. Dallas, you are an anomoly for other reasons. ;)

    Awesome quote!

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