Workers Output 2 ovens (cookies) output 1 oven (cookies) 40 27 79 52.5 117 76.5 154 190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 225 258 289 318 345 370 393 414 432 447 459 468 474 477 477 99 120 139.5 157.5 173.5 187.5 199.5 209.5 217.5 222.5 224.5 223.5 219.5 212.5 202.5 189.5 173.5 1. Cookies sell for $3.00 each and each requires $1.50 in ingredients. (The Black Sheep uses quality chocolate!) Graph the demand for labor as a function of the wage using the data in table 1. What happens to the number of workers hired when wages go up? How many workers will be hired and how many cookies made at a wage of $40.50? How many workers will be hired and how many cookies made if the wage falls to $27? 2. Nick could buy a 2nd oven. He estimates that the 2nd oven would raise output for any given number of workers as indicated in table 2 How many workers will be hired and how many cookies produced with two ovens at a wage of $40.50? At a wage of $27? Would your answer change any if there is a limited market for chocolate chip cookies so that Nick would have to lower the price of cookies to sell more? 3. Like many retail employers, Nick experiences high turnover among his workers which forces him to devote much time to hiring and training workers. He finds that paying higher wages discourages turnover saving money by making each worker more productive at higher wages. Now draw a hypothetical labor demand curve assuming higher wages are associated with higher productivity. 4. Nick hires workers in a competitive labor market where he finds that he can hire women workers more cheaply than men, at a wage of $18 instead of $27. Who will he hire? What will happen to the number of workers hired, and the number of cookies produced? Is this a sustainable equilibrium where the wages paid man and women will remain at the level of $18 and $27? Or do you expect a market adjustment raising the wage for women and lowering the wage for men?
Workers Output 2 ovens (cookies) output 1 oven (cookies) 40 27 79 52.5 117 76.5 154 190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 225 258 289 318 345 370 393 414 432 447 459 468 474 477 477 99 120 139.5 157.5 173.5 187.5 199.5 209.5 217.5 222.5 224.5 223.5 219.5 212.5 202.5 189.5 173.5 1. Cookies sell for $3.00 each and each requires $1.50 in ingredients. (The Black Sheep uses quality chocolate!) Graph the demand for labor as a function of the wage using the data in table 1. What happens to the number of workers hired when wages go up? How many workers will be hired and how many cookies made at a wage of $40.50? How many workers will be hired and how many cookies made if the wage falls to $27? 2. Nick could buy a 2nd oven. He estimates that the 2nd oven would raise output for any given number of workers as indicated in table 2 How many workers will be hired and how many cookies produced with two ovens at a wage of $40.50? At a wage of $27? Would your answer change any if there is a limited market for chocolate chip cookies so that Nick would have to lower the price of cookies to sell more? 3. Like many retail employers, Nick experiences high turnover among his workers which forces him to devote much time to hiring and training workers. He finds that paying higher wages discourages turnover saving money by making each worker more productive at higher wages. Now draw a hypothetical labor demand curve assuming higher wages are associated with higher productivity. 4. Nick hires workers in a competitive labor market where he finds that he can hire women workers more cheaply than men, at a wage of $18 instead of $27. Who will he hire? What will happen to the number of workers hired, and the number of cookies produced? Is this a sustainable equilibrium where the wages paid man and women will remain at the level of $18 and $27? Or do you expect a market adjustment raising the wage for women and lowering the wage for men?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Workers Output 2 ovens (cookies) output 1 oven (cookies)
40
27
79
52.5
76.5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
117
154
190
225
258
289
318
345
370
393
414
432
447
459
468
474
477
477
99
120
139.5
157.5
173.5
187.5
199.5
209.5
217.5
222.5
224.5
223.5
219.5
212.5
202.5
189.5
173.5
1. Cookies sell for $3.00 each and each requires $1.50 in ingredients. (The Black Sheep uses quality chocolate!) Graph the
demand for labor as a function of the wage using the data in table 1. What happens to the number of workers hired
when wages go up? How many workers will be hired and how many cookies made at a wage of $40.50? How many
workers will be hired and how many cookies made if the wage falls to $27?
2. Nick could buy a 2nd oven. He estimates that the 2nd oven would raise output for any given number of workers as
indicated in table 2 How many workers will be hired and how many cookies produced with two ovens at a wage of
$40.50? At a wage of $27? Would your answer change any if there is a limited market for chocolate chip cookies so that
Nick would have to lower the price of cookies to sell more?
3. Like many retail employers, Nick experiences high turnover among his workers which forces him to devote much time
to hiring and training workers. He finds that paying higher wages discourages turnover saving money by making each
worker more productive at higher wages. Now draw a hypothetical labor demand curve assuming higher wages are
associated with higher productivity.
4. Nick hires workers in a competitive labor market where he finds that he can hire women workers more cheaply than
men, at a wage of $18 instead of $27. Who will he hire? What will happen to the number of workers hired, and the number
of cookies produced? Is this a sustainable equilibrium where the wages paid man and women will remain at the level of
$18 and $27? Or do you expect a market adjustment raising the wage for women and lowering the wage for men?
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