Econ Micro (book Only)
Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
Question
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Chapter 12, Problem 1P
To determine

To calculate the total hours per week and the reasons quantity supplied increases with the hourly wage and the individuals who have a backward bending supply curve and whether the market supply curve would bend backwards in the table shown below.

Concept Introduction:

Wage rates: The amount of base wage paid to a worker per hour or day or per unit of output if on piecework

Market supply curve: this is an upward sloping curve depicting the positive relationship between price and quantity supplied

Expert Solution & Answer
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Explanation of Solution

From the data given in the table, we can determine the total hours of labor hours supplied by,

Hourly wage $ Q1 Q2 Q3 QT
15 20 0 0 35
16 25 0 0 41
17 35 10 0 62
18 45 25 10 98
19 42 40 30 131
20 38 37 45 140

Here, the quantity supplied will tend to increase with an increase in the hourly wage because every additional unit of labor supplied will now earn more than the earlier level.

To understand the backward bending nature of labor supply, we see that the individuals Q1 and Q2will show a backward bending supply curve in the range shown as we can clearly see that with an increase in the hourly wage after a point, there is a reduction in the hours of work performed.

The market supply of labor does not show a backward bending supply curve of labor which can be assessed from the column QT.

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Students have asked these similar questions
1.7)   Imagine that you work for 40 hours per week at the wage rate of £10 an hour. Your free hours are defined as the number of hours not spent in work per week, which in this case is  24 hours × 7 days − 40 hours = 128 hours per week  Suppose now that your wage rate has increased by 100%. If you want to keep your total weekly income constant, then: Select one or more: a.Your total number of hours will fall by 25%. b.Your total number of hours will fall by 50%. c.You will work 25 hours per week. d.Your free time will increase by 25%.
5. Consider the market for labor. When you draw a supply and demand curve, what group of people represent “supply”? Explain.
6.Consider the market for labor. When you draw a supply and demand curve, what group of people represent “demand”? Explain.
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