Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 12, Problem 4P
To determine
Explain the reason for a permanent wage difference between the market for labour or within the same labour market.
Concept Introduction:
Market for labour: This is a place where employers and employees interact with each other. This refers to the
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6. Plotting the supply of labor
In Providence, 120 people are willing to spend an hour working as pizza makers for an hourly wage of $20. For each additional $5 that the wage
increases above $20, an additional 30 people are willing to spend an hour working.
For hourly wages of $20, $25, $30, $35, and $40, plot the daily labor supply curve for pizza makers on the following graph.
WAGE (Dollars per hour)
50
45
40
35
30
25
20
15
10
5
0
0
+
30
60
90 120 150 180 210
LABOR (Number of workers)
240 270 300
Supply
What is one explanation for why this labor supply curve is upward sloping?
The opportunity cost of leisure increases as wages increase.
O Unemployment benefits are steadily declining.
Wages have to increase to accommodate union pressure.
O Firms are willing to hire fewer pizza makers at a higher wage.
ONLY TYPED ANSWER
Suppose there are two goods, pizza and beverage. Suppose alp=5289, atp=911, alb=2508, atb=2172, Pp=11400, and Pb=12500. What is the equilibrium wage?
12. The figure shows Edwyn’s labor supply curve.
Consider a wage increase from $5 to $6. For Edwyn, does the price effect or income effect dominate his labor supply decision?
Consider a wage increase from $7 to $8. For Edwyn, does the price effect or income effect dominate his labor supply decision?
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- Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil worker in Texas. In each case, sketch a demand and supply diagram to illustrate your answer. The price of oil rises. New all-drilling equipment is invented that is cheap and requires few workers to run. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry. Government imposes costly new regulations to make oil-drilling a safer job.arrow_forwardName some factors that can cause a shift in the demand curve in labor markets.arrow_forwardA company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $270 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers. Marginal Product of Value of the Marginal Product Labor Labor Output (Units of output) of Labor (Number of workers) (Units of output) (Dollars) 20 1 20 19 2 39 18 3 57 15 72 12 5 84 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first worker should be plotted with a horizontal coordinate of 0.5, the value halfway…arrow_forward
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