Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 19, Problem 3CQQ
To determine
Example of efficiency wages.
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Greg is running an economic consulting company with three employees. He is considering hiring more employees. The going salary for economic consultants with the skills the company needs is $118,000 per year. Each new employee will need a computer and other equipment that cost $3,000 per year. Each client pays the company $30,000 per year. The table shows how the number of clients depends on the number of employees. What is the company's marginal revenue from the first additional employee? ($)
Numer of employees
3- 10
4- 15
5- 19
6- 22
7- 24
Lorna’s Lumberyard is a monopsony. Lorna estimates that at a wage of $10, 100 workers would be willing to work for her. Similarly, at a wage of $12, 200 workers would be willing to work. Her marginal factor cost is:
a. $10.
b. $14.
c. $120.
d. $140.
e. $240.
Think of a job that either you or a friend/relative held that paid a wage that you thought was either unfair or inequitable compared to the wages or salaries of other positions within the business or within the wider business community. Answer the following questions in relation to that example.
On what basis do you think the wage was set? I.e. What factors influenced how much the organization valued the role?
Why did you think it was unfair?
If there was an opportunity to be covered by a Union contract/agreement, do you think there would have been an increase/decrease in the wage?
If you were the employer, what would cause you to increase the wage for that role?
and finally,
5. Do you think that the wages/salaries of the main "jobs" in our society are allocated fairly? Provide an example of a role that you think is highly undervalued and explain why.
For example, should CEOs and celebrities earn millions of dollars each year compared to child care workers or stay at home parents who…
Chapter 19 Solutions
Principles of Economics (MindTap Course List)
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Similar questions
- Your enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $6 per hour, and a sandwich sells for $3. If your uncle is maximizing his profit, what is the value of the marginal product of the last worker he hired? What is that worker's marginal product?arrow_forwardCindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12th. Cindy estimates that a 12th worker would cost her $100 per day in wages and benefits while increasing her total revenue from $2,600 per day to $2,750 per day. Should Cindy hire a 12th worker? a. Yes. b. No. c. You need more information to figure this out.arrow_forwardMarshall and Lily work at a local department store.Marshall, who greets customers as they arrive, ispaid less than Lily, who cleans the bathrooms. Thisis an example ofa. a compensating differential.b. human capital.c. signaling.d. efficiency wages.arrow_forward
- You have two choices in jobs. Job A means you earn $70,000 a year, in an area where the average income is $80,000. Job B means you earn $60,000 a year in an area where the average income is $50,000. Assume all other factors such as housing quality, schooling, etc are the same. A "rational profit maximizer" would: Have an indeterminate choice. Be indifferent between the two wages. Always choose the lower wage. Always choose the higher wage.arrow_forwardCindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12th. Cindy estimates that a 12th worker would cost her $100 per day in wages and benefits while increasing her total revenue from $2,600 per day to $2,750 per day. Should Cindy hire a 12th worker? 1. Yes. 2. No. 3. You need more information to figure this out.arrow_forwardIf the market value of the output of the last worker hired by a firm (VMPL) is higher than the wage paid to the worker, what should the firm do? a.Hire more workers b.Keep the same number of workers c.Lay off workers d.Change its production methodsarrow_forward
- value of average product of labor be 25 dollars.arrow_forwardnot use ai pleasearrow_forwardFemale workers tend to earn a lower wage compared to their male counterparts when performing the same job. What is this an example of? a.Signaling b.All of the answers are correct c.Discrimination d.Screeningarrow_forward
- Boeing created, and recently expanded, an airplane manufacturing center in Charleston, South Carolina. One of the factors that likely influenced this location decision is that South Carolina is a "right to work" state. This represents a) a place factor related to labor. b) a transportation factor related to the market. c) higher wages for Boeing workers in South Carolina relative to Washington. d) a place factor related to the political environment.arrow_forwardSuppose the product market is competitive. Which of the following would explain why the market forces would drive discriminating employers out of business? a. Workers will refuse to work for a discriminating employer. c. Discrimination imposes an additional cost on the employer, and high-cost firms are eventually driven out of a competitive output market. c. The government mandates that the employer not act on his or her desire to discriminate. d. A competitive output market requires all workers to be paid the same wage. e. Customers will refuse to purchase from a discriminating employer.arrow_forwardShort answer question. Discuss how a firm’s demand for labor and the wage rate might change if the market were to become imperfect.arrow_forward
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