LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 10, Problem 3RQ
To determine
Wage employment outcome in a model of
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Suppose the firm’s labor demand curve is given by w = 20 - 0.01E where w is the hourly wage and E is the level of employment. Suppose also that the union’s utility function is given by U = w * E It is easy to show that the marginal utility of the wage for the union is E and the marginal utility of employment is w. What wage would a monopoly union demand? How many workers will be employed under the union contract?
Describe how we calculate the percentage decline in national income resulting from the misallocation of labor in a model of monopoly unionism. What is the dollar value of this allocative inefficiency if unions and firms reach efficient contracts and the contract curve is vertical?
Describe the wage-employment outcome in a model of monopoly unionism. Explain why (and in what sense) this wage-employment outcome is inefficient.
Chapter 10 Solutions
LABOR ECONOMICS
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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- Describe the two basic strategies of unions in increasing wage rates for their members.arrow_forwardA monopsonist faces a market labor supply curve w=20+L where w is wage rate and L is the number of workers employed. If the firm's labor demand curve is w=200-4L, what is the optimal wage rate and quantity of labor employed?arrow_forwardsmall hospital in rural Alaska is a monopsony employer of nurses. The nurses unionize. They have little power at the bargaining table, but they do bargain for a slightly higher wage. What happens to the number of nurses employed? What happens to labor costs and marginal labor costs?arrow_forward
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