Abstract
Abstract There are two commodities in this model, a composite consumption good, x, and labour service, y, for example, the time spent at work. All individuals have the same preference ordering, which is represented by a cardinal utility function u(x,y). The market buys efficiency labour, not labour time itself, and individuals although they are identical in preferences vary in their productivity ability to supply labour. Every individual possesses a specific ability (=marginal productivity) n. Ability is distributed in the population according to the density function f(n).
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