Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 20, Problem 4CQQ
To determine
Increase in wage rate and its effect in the labor
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The demand for a factor of production (productive resource) is derived from the demand for the good
the factor produces
True
False
The information below is for a competitive labor market.
A. Calculate the value of the marginal product of labor at X.
B. Find the equilibrium wage.
C. Find the equilibrium quantity of labor employed.
For each of the following determine the impact on the demand or the supply of labor and the effect on the equilibrium wage and quantity of labor employed.
a. An increase in the price of capital.
b. A union is formed which uses collective bargaining to obtain higher wages for its members.
c. The marginal productivity of workers rises.
d. People desire leisure more than ever before (e.g. it is Christmas Day).
e. The wages offered in other labor markets requiring similar skills are now offering substantially higher wages.
f. The fringe (non-monetary) benefits offered in this market have increased substantially.
g. The government has just adopted an "open-door' immigration policy?
Chapter 20 Solutions
Essentials of Economics (MindTap Course List)
Ch. 20.1 - Prob. 1QQCh. 20.2 - Prob. 2QQCh. 20.3 - Prob. 3QQCh. 20.4 - Prob. 4QQCh. 20.5 - Prob. 5QQCh. 20 - Prob. 1CQQCh. 20 - Prob. 2CQQCh. 20 - Prob. 3CQQCh. 20 - Prob. 4CQQCh. 20 - Prob. 5CQQ
Ch. 20 - Prob. 6CQQCh. 20 - Prob. 1QRCh. 20 - Prob. 2QRCh. 20 - Prob. 3QRCh. 20 - Prob. 4QRCh. 20 - Prob. 5QRCh. 20 - Prob. 6QRCh. 20 - Prob. 7QRCh. 20 - Prob. 1PACh. 20 - Prob. 2PACh. 20 - Prob. 4PACh. 20 - Prob. 5PACh. 20 - Prob. 6PACh. 20 - Prob. 7PACh. 20 - Prob. 8PACh. 20 - Prob. 9PACh. 20 - Prob. 10PA
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- Labor demand becomes more elastic as the demand for the firm’s output a. becomes more elastic b. becomes less elastic c. increases d. decreases e. is at market equilibriumarrow_forwardWhich of the following can reduce the marginal revenue product of labor? Select one: a. A reduction in the demand for firms– products. b. A reduction in workers– supply of labor to firms. c. A decrease in firms– demand for inputs that substitute for labor. d. An increase in the extra output firms gain from adding another unit of labor.arrow_forwardWhich of the following correctly explains the effect of a variable on the labor demand curve? A. If human capital increases, then we will move up the labor demand curve. B. If the price of the product increases, then the labor demand curve will shift to the left. C. If the number of firms in the market increases, then the labor demand curve will shift to the right. D. If the wage increases, then the labor demand curve will shift to the right.arrow_forward
- In the model of a competitive labor market, an increase in the wage, ceteris paribus, causes A. an increase in the quantity demanded of labor B. the MRP curve to shift to the left c. a decrease in the quantity demanded of labor D. the MRP curve shifts to the rightarrow_forwardAn increase in the supply of labor will ________ wages and ________ employment.A.decrease; decreaseB.increase; increaseC.increase; decreaseD.decrease; increasearrow_forwardHow does an increase in the minimum wage affect employment in the short run according to conventional economic theory? A. Increases employment B. Decreases employment C. Has no effect on employment D. Depends on other factorsarrow_forward
- In a competitive labor market for bakers, the equilibrium wage rate .. A. rises if the market price of bakery items falls OB. rises if new technology makes it easier for anyone to be a baker OC. falls if the supply of bakers decreases D. rises if bakers become more productivearrow_forwardWhich would decrease the demand for a particular type of labor? An increase in the prices of the resources that are complements to that type of labor An increase in the wages of that type of labor X An increase in the demand for the products produced by that type of labor A decrease in the prices of those resources that are complements for that type of laborarrow_forwardConsider the following labor supply and demand curves. For each of the following situations, show and explain what would happen to the labor market. a) The firm finds a new market for their output. Wage WE S Quantityarrow_forward
- When is an employer forced to keep the labor cost low? A. When the product demand is inelastic. B. When the employer is in a competitive product market. C. When the rate of unemployment is low. D. When certain skills are essential for production.arrow_forwardSuppose Kara maximizes her profits by hiring workers to produce hand-made soaps. Her soaps sell for $1 each. How should Kara decide on how many workers she should hire? a.Hire workers up to the point when the price of her soaps starts to fall from $1 b.Hire workers up to the point when the total product of all her workers is at its maximum c.Hire up to the point when the wage rate equals to the value of the marginal product of the last worker hired d.Hire up to the point when the marginal product of the last worker hired is equal to zeroarrow_forwardThe demand for labor depends on ______ and _______. a) the supply of labor; the marginal product of labor b) the supply of labor; the price of output produced c) the rate of price inflation; the price of the output produced d) the marginal product of labor; the price of output producedarrow_forward
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