Assignment Answer

992 Words4 Pages
1. (Resource Demand) How do firms and individuals determine if it 's worth it to (a) invest in capital improvements, (b) hire additional workers, or (c) decide where to work? Briefly explain. Answer – Firms and individuals determine if it’s worth it to invest in capital improvements when the marginal product of capital is more than the interest paid on each unit of capital. Similarly, when the marginal product of labor is more than the wage rate of each unit of labor, until then the firms and individuals will keep on hiring additional workers. The individual will decide to work till the point where his wage rate received is more than the tax rate paid. 2. (Shifts of Resource Demand) A local pizzeria hires college students to make…show more content…
The supply of labor for such workplace would increase at a given wage rate. 8. (Craft Unions) Both industrial unions and craft unions attempt to raise their members’ wages, but each goes about it differently. Explain the difference in approaches and describe the impact these differences have on excess quantity of labor supplied. Answer - Craft unions have frequently forced employers to agree to hire only union members, thereby gaining virtually complete control of the labor supply. Then, by following restrictive membership policies such as limiting the number of new members getting admitted, they artificially restrict labor supply. Therefore, by excluding workers from union and therefore from the labor supply, crafts union succeed in elevating wage rates. An industrial union that includes virtually all available workers in its membership can put firms under great pressure to agree to its wage demands. Because of its legal right to strike, such a union can threaten to deprive firms of their entire labour supply, and an actual strike can do just that. 9. Why do you think the role of the unions in the US has declined over the years? Briefly discuss. Answer - The role of labor unions in the U.S has declined over the years because of strong government policies, unfavorable working and law environment for labors, increased labor hostility, and high levels of unfair labor practices. The Taft-Hartley Act of 1947 placed draconian

More about Assignment Answer

Open Document