LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Chapter 11, Problem 3RQ
To determine
Explain the given statement.
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A firm hires two workers to assemble bicycles. The firm values each assembly at $12. Charlie’s marginal cost of allocating effort to the production process is MC = 4N, where N is the number of bicycles assembled per hour. Donna’s marginal cost is MC = 6N. a. If the firm pays piece rates, what will be each worker’s hourly wage? b. Suppose the firm pays a time rate of $15 per hour and fires any worker who does not assemble at least 1.5 bicycles per hour. How many bicycles will each worker assemble i n a n e ight-hour day?
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- Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product? Show that this condition is identical to the one that requires a profit-maximizing firm to produce the level of output where the price of the output equals the marginal cost of production.arrow_forwardEldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?arrow_forwardPlace the phrases in the appropriate category according to whether or not each is a potential reason a firm would have to pay workers an efficiency wage. Reason to pay an efficiency wage more effort from workers less worker turnover downward wage inflexibility excessive cost of capital equipment Answer Bank Not a reason to pay an efficiency wage less need to supervise closely higher consumption levelsarrow_forward
- a) If Wm = Wf from what type of labor market does the firm hire its workers? b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run? i) The market demand for labor ii)The wage rate the firm will pay c) Suppose the firm only produces good X and that the price of good Y, a substitute good, decreases. What will happen to the optimal quantity of labor the firm will hire? Explain. d) If the labor market were a monopsony, would the monopsonist hire more, fewer, or the same number of workers as QM to maximize its profit?arrow_forwardWhich of the following is required for all workers to earn identical wages in the long run? Check all that apply.arrow_forward“Managing pay in organisations is easy. You simply pay each person the going rate for doing their job.” To what extent do you agree with this view? Justify your answerarrow_forward
- The Geneva Watch Corporation manufactures watches on a conveyor belt with six stations. One worker stands at each station and performs the following tasks:Workers get paid $10 per hour. You can ignore any idle time of workers resulting from the beginning or the end of the day. a. What is the labor content? b. Assume a demand rate of 50 watches per hour. What is the takt time? c. Assume a demand rate of 50 watches per hour. What is the target manpower? d. An external supplier suggests shipping the battery module with preinstalled batteries, thereby eliminating the need for step 10. How would that impact process capacity? e. How could you increase the capacity of the process by rebalancing it?arrow_forwardWhat Is Fixed-Price Contracts?arrow_forwardExplain why employers often employ young females instead of young malesarrow_forward
- According to the idea of comparable worth, a firm employing secretaries and steelworkers should ideally pay equal wages to both the groups of workers irrespective of the type of job each group does. True or False?arrow_forwardK = Capital L = Labor Q = Outputs A) Determine the number of workers the form should hire to maximize profits. Price is P = 10 Wage rate = W = 250 Rental Price = K = 200 B) Find maximam profit К 255 55555555555 10-63564400 = 2 Q 150 250 5 330 405 7425 58500 590 510 535 5505 5 12 500 A) Determine the # of workers the firm should hire to maximize profita Price is P = 10 Wage rate = W = 2.50 Rental Price=K=200 B) Fund maximum profit.arrow_forwardA school district received 750 applications for 10 new openings. What does this tell you about the wages offered for this position in relation to the equilibrium wage? Explain.arrow_forward
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