ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 17, Problem 3RQ
To determine
Whether the given statement is true or false.
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Students have asked these similar questions
The marginal expenditure of a
monopsonist is $9. The wage it
currently pays is $3. The labor supply
curve has a constant elasticity. What
is the elasticity of the labor supply? *
O 3
O 1
0.33
0.5
Employment
0
1
2
3
4
5
6
O 4-5 workers.
3-4 workers.
Product
O 0-1 workers.
O 5-6 workers.
0
6
11
15
18
20
21
Price
5
5
5
5
5
5
On the basis of the information in the table above, if the firm is hiring workers under
purely competitive conditions at a wage rate of $10, it will choose to employ
between:
5
Revenue MRP
Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equipped with a shovel, a machete, and a chainsaw. Clearing one acre brings in $1,000 in revenue. Each worker’s equipment costs the worker’s employer $150 per month to rent and each worker toils 40 hours per week for four weeks each month. LO17.6
Now consider the employer’s total costs. These include the equipment costs as well as a normal profit of $50 per acre. If the firm pays workers the minimum wage of $6.20 per hour, what will the firm’s economic profit or loss be per acre?
At what value would the minimum wage have to be set so that the firm would make zero economic profit from employing an additional low-skilled worker to clear woodland?
Chapter 17 Solutions
ECONOMICS W/CONNECT+20 >C<
Ch. 17.3 - Prob. 1QQCh. 17.3 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17.3 - Prob. 4QQCh. 17.A - Prob. 1ADQCh. 17.A - Prob. 2ADQCh. 17.A - Prob. 3ADQCh. 17.A - Prob. 4ADQCh. 17.A - Prob. 5ADQCh. 17.A - Prob. 1ARQ
Ch. 17.A - Prob. 2ARQCh. 17.A - Prob. 3ARQCh. 17.A - Prob. 4ARQCh. 17.A - Prob. 1APCh. 17.A - Prob. 2APCh. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5P
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- Your answer to the previous question can be explained by the differences in the Marginal Cost and Average Total Cost faced by a monopsony vs a perfectly competitive firm. A monopsony's Marginal Cost curve shifts upward, compared to a perfectly competitive firm. A monopsony's ATC curve shifts down and left, compared to a perfectly competitive firm. Why is that the case? O Higher MC curve: A perfectly competitive firm faces an increasing wage. A monopsonist faces a decreasing wage as labor increases Lower ATC curve: By restricting the quantity of labor employed, a monopsonist can lower its average total cost, and earn positive profits O Higher MC curve: A perfectly competitive firm faces a constant wage. A monopsonist has to pay a higher wage as it hires less labor Lower ATC curve: By increasing the quantity of labor employed, a monopsonist can lower its average total cost, and earn positive profits Higher MC curve: A perfectly competitive firm faces a higher price on inputs, and a…arrow_forwardT True or False. Provide an explanation - all points are awarded on the basis of the explanation. If a firm sells her output in a competitive market, then the overall production of this firm does not depend on whether the firm is a monopsonist in the labour market or whether the labour market is competitive. This follows because the price for her output is determined in the competitive market for the firms output and the firm equates the marginal cost of production to the market price for her output.arrow_forward4. Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equippedwith a shovel, a machete, and a chainsaw. Clearing one acrebrings in $1,000 in revenue. Each worker’s equipment coststhe worker’s employer $150 per month to rent and each workertoils 40 hours per week for four weeks each month. LO17.6 a. What is the marginal revenue product of hiring one lowskilled worker to clear woodland for one month?b. How much revenue per hour does each worker bring in?c. If the minimum wage were $6.20, would the revenue perhour in part b exceed the minimum wage? If so, by howmuch per hour?d. Now consider the employer’s total costs. These includethe equipment costs as well as a normal profit of $50 peracre. If the firm pays workers the minimum wage of$6.20 per hour, what will the firm’s economic profit orloss be per acre?e. At what value would the minimum wage have to be set sothat the firm would make zero economic profit fromemploying an…arrow_forward
- Complete the following labor supply table for a firm hiring labor competitively: LO17.2 Show graphically the labor supply and marginal resource (labor) cost curves for this firm. Are the curves the same or different? If they are different, which one is higher? Plot the labor demand data of review question 2 in Chapter 16 on the graph used in part a above. What are the equilibrium wage rate and level of employment?arrow_forward4. Inclusive, or industrial, unions - Negotiating a higher industry wage Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 18 15 Demand 12 Supply Supply Demand 3 10 15 20 25 30 QUANTITY OF LABOR ---- --- Co WAGE RATEarrow_forwardWhich statement is false regarding unions? O a) With unions successfully raising wages for workers, it can also reduce overall employment. b) When unions drive up wages for workers, it results in an incentive for firms to hire more workers. OC) Unions drive up wages and benefits for workers by asserting market power over employers. O d) It is possible that raising wages for union workers can lead to higher productivity than nonunion workers because union workers are more likely to stay on the job longer.arrow_forward
- In the figure to the right, suppose that We is a wage rate of $28 per hour and W₁ is a wage rate of $39 per hour. In addition, Quis 12,000 workers per hour, Q is 16,000 workers per hour, and Q is 21,000 workers per hour. How much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage W₁ above the equilibrium wage W? Firms spend a total of $ per hour response as a whole number.) on unionized labor. (Enter your C Wage Rate ($ per hour) Wu We A B S Quantity of Labor per time periodarrow_forwardSuppose that the wage rate is $13 per hour and the price of the product is $2. Values for output and labor are in units per hour. b. L 0. 24 44 60 72 80 4 84 Find the profit-maximizing quantity of labor. (Assume the firm can hire up to 6 workers.) The profit-maximizing quantity of labor is worker(s). (Enter a numeric response using an integer.) Suppose that the price of the product remains $2 but that the wage rate increases to $36. Find the new profit maximizing level of L The profit-maximizing quantity of labor is worker(s). Suppose that the price of the product decreases to $1 and the wage remains at $13 per hour. Find the new profit-maximizing L.arrow_forwardQuestion 4 Suppose that the supply and demand for labor for a monopsonist are given below: Wage Quantity of Labor Demanded Wage Quantity of Labor Supplied $2 5 $2 1 4 2 3 8 3 11 2 11 4 14 1 14 5 What is the numerical value of the marginal revenue product for the third unit of labor? What is the numerical value of the marginal resource cost for the third unit of labor?arrow_forward
- The table below shows a firm that is perfectly competitive in both the labor and product markets, showing how much daily output a firm can produce using various numbers of workers. Number of Workers 1 2 3 4 5 6 Output O $2 O $460 O $115 O $100 O $40 3 9 16 21 23 24 If output sells for $20/unit, what is the marginal revenue product of the 5th worker?arrow_forwardThe demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages, when: O there are few close substitutes for the unionized workers. O trade barriers limit the importation of the product produced by the unionized workers. O the cost of employing the unionized workers is a small part of the total cost of product that they produce. the demand for the product produced by the unionized workers is relatively price elastic. A strike, or the threat of one, is most likely to be effective when: O demand for the firm's product is weak. O foreign competition for the product is high. O the firm has a low product inventory. O demand for the product produced by the union workers is highly elastic.arrow_forwardIf a labor union is a sole supplier of labor in an industry, by negotiating with the firms in the industry, it will be able to achieve a wage for its members that is Select the correct answer below: above what the equilibrium wage would otherwise have been. below what the equilibrium wage would otherwise have been. O equal to what the equilibrium wage would otherwise have been. dependent on competition in the labor market.arrow_forward
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