Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 18, Problem 17APA
To determine
The wage rate in a competitive market.
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Read the "Clear it Up: Do Profit Maximizing Employers Exploit Labor"
Do Profit Maximizing Employers Exploit Labor? (Source: OER)
If you look back at the labor dynamics of supply and demand, you will see that only the firm pays the last worker it hires what they’re worth to the firm. Every other worker brings in more revenue than the firm pays him or her. This has sometimes led to the claim that employers exploit workers because they do not pay workers what they are worth. Let’s think about this claim. The first worker is worth $x to the firm, and the second worker is worth $y, but why are they worth that much? It is because of the capital and technology with which they work. The difference between workers’ worth and their compensation goes to pay for the capital, technology, without which the workers wouldn’t have a job. The difference also goes to the employer’s profit, without which the firm would close and workers wouldn’t have a job. The firm may be earning excessive profits,…
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Question 24 of 30
What is the elasticity of demand for labor?
A measure of how upset your boss is when his employees ask for more money.
O A measure of how responsive firms' supply of labor is to changes in the wage rate.
A measure of the extra revenue earned by the firm resulting from hiring one more unit of labor.
A measure of how much firms' profits are affected by changes to wages.
A measure of how sensitive the amount of labor firms will hire is to changes in the wage rate.
A measure of the sensitivity of wage rates to the unemployment rate.
Suppose you discover that your boss has a demand for labor that is very elastic. What does this imply in terms of
y
requesting a raise?
Your boss may likely eliminate some positions (fire some people) if wages rise.
Your boss will maintain the exact same labor force (not fire or hire anyone) if wages rise.
Your boss is a flexible and undertanding person, so he or she is likely to accomodate any request…
16. Bob White argues that if his wage went up from $10/hour to $20/hour he would still be able to pay
rent and feed his family even if he worked half as many hours. So, if his wage increased he would want
to work less.
What is strange about Bob White's labor supply curve?
a. it is very elastic
b. it is very inelastic
c. it slopes down
d. it is vertical
Chapter 18 Solutions
Macroeconomics
Ch. 18.1 - Prob. 1RQCh. 18.1 - Prob. 2RQCh. 18.1 - Prob. 3RQCh. 18.2 - Prob. 1RQCh. 18.2 - Prob. 2RQCh. 18.2 - Prob. 3RQCh. 18.2 - Prob. 4RQCh. 18.3 - Prob. 1RQCh. 18.3 - Prob. 2RQCh. 18.3 - Prob. 3RQ
Ch. 18.3 - Prob. 4RQCh. 18.3 - Prob. 5RQCh. 18.3 - Prob. 6RQCh. 18.4 - Prob. 1RQCh. 18.4 - Prob. 2RQCh. 18.4 - Prob. 3RQCh. 18.4 - Prob. 4RQCh. 18.4 - Prob. 5RQCh. 18 - Prob. 1SPACh. 18 - Prob. 2SPACh. 18 - Prob. 3SPACh. 18 - Prob. 4SPACh. 18 - Prob. 5SPACh. 18 - Prob. 6SPACh. 18 - Prob. 7SPACh. 18 - Prob. 8SPACh. 18 - Prob. 9SPACh. 18 - Prob. 10SPACh. 18 - Prob. 11APACh. 18 - Prob. 12APACh. 18 - Prob. 13APACh. 18 - Prob. 14APACh. 18 - Prob. 15APACh. 18 - Prob. 16APACh. 18 - Prob. 17APACh. 18 - Prob. 18APACh. 18 - Prob. 19APACh. 18 - Prob. 20APACh. 18 - Prob. 21APACh. 18 - Prob. 22APACh. 18 - Prob. 23APACh. 18 - Prob. 24APACh. 18 - Prob. 25APACh. 18 - Prob. 26APACh. 18 - Prob. 27APA
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Similar questions
- Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?arrow_forwardName some factors that can cause- a shift in the supply curve in labor markets.arrow_forward12. 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?arrow_forward
- 2 of 2 Book Print erences ic raw ill 430s workers S 10 20 30 40 5:07 / 5:07 The following table gives output for different numbers of workers for Shiny Sleeves, a producer of shirt varnish. Shiny Sleeve's wages are $10 per hour. For each level of workers, calculate Shiny Sleeve's total hourly wage cost. Instructions: Enter Marginal Product and Wage Cost in whole numbers and Marginal Cost rounded to two decimal places. For each jump between levels of workers and output, calculate Shiny Sleeve's Marginal Product and Marginal Cost. output/hour 50 100 140 170 Marginal Product LO 5 4 3 1xarrow_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 $15 to $20 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. (? 30 25 Demand Supply Supply 15 10 Demand 5 12 24 36 48 60 72 QUANTITY OF LABOR WAGE RATE 20arrow_forward56 48 40 32 24 16 0 - Total Cost is $ 2400 4800 7200 The graph shows the short-run cost curves for a firm in a perfectly competitive market. The firm's only variable input is labour and the wage rate is $36. If market price is $48: - profit-maximizing level of output is - Total Fixed Cost is $ - for the profit maximizing output the firm should hire - the firm's profit is $ If market price is $16: - profit-maximizing level of output is 9600 - the firm's profit is $ SMC ATC units of labour. AVCarrow_forward
- 10. Recently, some college alumni started a moving service for students living on campus. They have three employees and are debating hiring a fourth. The hourly wage for an employee is $18 per hour. An average moving job takes four hours. The company currently does three moving jobs per week, but with one more employee, the company could manage five jobs per week. The company charges $80 for a moving job. What would be the new employee’s marginal product of labor? What is the value of that marginal product? Should the moving service hire a fourth worker?arrow_forward11. Describe what happens to quantity of labor supplied when wages are at the equilibrium level, above equilibrium, and below equilibrium.arrow_forwardFord Motors 2010-2019 How does the type of labor used (high-skilled or low-skilled) impact the supply of labor? How do these influence the wage rate in the company?arrow_forward
- Number of Workers Chairs per week 0 1 2 3 4 5 6 7 0 100 190 2 workers 3 workers 4 workers 5 workers 6 workers 7 workers 270 340 400 450 480 The table above describes the production schedule of a camera manufacturer. The company can hire as many workers as it wants at the market wage rate of $250 per week per worker and sell as many cameras as it wants at the price of $5 each. To maximize profits, the firm should hire:arrow_forwardTable 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and the price at which the film can sell output in the perfectly competitive market where it operates. What is the value of the marginal product at each level of labor? If the firm operates in a perfectly competitive labor market where the going market wage is 12, what is the films profit maximizing level of employment?arrow_forwardWhat is die price commonly called in the labor market?arrow_forward
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