At a university faculty meeting, a proposal was made to increațe health care benefits for new faculty to keep pace with the high cost of health care. True or False: In the long run, this increase in health care benefits will have no effect on the attractiveness of faculty positions compared to other jobs. (Hint: Consider how the indifference principle applies to this occupation in the long run.) True False

At a university faculty meeting, a proposal was made to increațe health care benefits for new faculty to keep pace with the high cost of health care. True or False: In the long run, this increase in health care benefits will have no effect on the attractiveness of faculty positions compared to other jobs. (Hint: Consider how the indifference principle applies to this occupation in the long run.) True False

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

According to the Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring planMitsubishi conducts an analysis of how labour and capital are used in its production process. Prior to restructuring Mitsubishi’s marginal rate of technical substitution is 0.15 ( in absolute value). To hire workers. Suppose that Mitsubishi must pay the competitive hourly wage of US$ 15. In thestudy of production process and markets where capital is procured, suppose that Mitsubishi determine that its marginal productivity of capital is 0.5 small cars per hour at its new targeted level of output and that capital is procured in a highly competitive market. The same study indicates that the average selling price of Mitsubishi’s smallest car is US$ 9500. Determine the rate at which Mitsubishi can rent capital and marginal productivity of labour at its new targeted level of output. To minimize…
Consider a firm for which production depends on two normal inputs, labor and capital, with prices w and r, respectively. Initially the firm faces market prices of w = 6 and r = 4. These prices then shift to w = 4 and r = 2.a. In which direction will the substitution effect change the firm’s employment and capital s tock?b. In which direction will the scale effect change the firm’s employment and capital stock?c. Can we say conclusively whether the firm will use more or less labor? More or less c apital?
Suppose that a professor of labor economics finds that one of their research subjects has earned significantly higher wages throughout their lifetime than would be predicted by standard measured variables. The economist also notes that each of the subject's job roles was linked to social connections established at their family's yacht club. Which item from the following list most likely explains this individual’s high earnings? Chance Efficiency wages Compensating differentials Effort Suppose that Juanita receives higher pay from her company than her colleagues, despite the fact that they perform basically the same type of role. If Juanita's productivity is about 37 percent higher than that of her second-best colleague, which of the concepts from the following list can explain this wage disparity? Check all that apply. Human capital Chance Compensating differentials Efficiency wages Effort
For the following alternatives, argue whether it is true, false or uncertain, according to the following statement:"If the marginal productivity value (MVP) of the last worker hired is $10 and the wage is $12, then the firm":(a) Will have an economic utility.b) Needs to decrease the wagec) It needs to expand productiond) It needs to decrease the number of workers hired.
Suppose you are Dean of the Faculty at St. Anford University. You hire assistant professors for a probationary period of seven years, after which they come up for tenure and are either promoted and gain a job for life, or turned down, and must find another job elsewhere. An assistant professor’s type is either Good or Brilliant. All worse types have already been weeded out in the hiring process, but you cannot distinguish between Good and Brilliant types. An assistant professor observes his/her type, and you would like to only tenure Brilliant types. Consider that the total lifetime payoff of being tenure at St. Anford is $2 million, while anyone denied tenure at St. Anford will be hired by some College and receive a lifetime payoff of $0.5 million. Tenure decisions are entirely based on scientific publications. This requires doing research and publishing the findings. Each publication requires effort and time and causes strain on the family; all these are costly to the faculty…
Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). If the supply of this kind of labor decreases, we would expect which of the following regarding the equilibrium wage, W, and the equilibrium quantity of labor, L, employed? Group of answer choices a) a decrease in W and a decrease L b) a decrease in W and a decrease L c) an increase in W and a decrease L d) a decrease in W and no change in L e) increase in W and an increase in L
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and capital are used in its production process. Prior to restructuring Mitsubishi’s marginal rate of technical substitution is 0.12 (in absolute value). To hire workers, suppose that Mitsubishi must pay the competitive hourly wage of ¥1,800. In the study of its production process and markets where capital is procured, suppose that Mitsubishi determines that its marginal productivity of capital is 0.8 small cars per hour at its new targeted level of output and that capital is procured in a highly competitive market. The same study indicates that the average selling price of Mitsubishi’s smallest car is ¥1,200,000. Determine the rate at which Mitsubishi can rent capital and the marginal productivity of labor at its new targeted level of output. To…
Yvette currently earns a wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the number of hours she works. Suppose the price of milk is $2.50 per gallon; in this case, Yvette's wage, in terms of the amount of milk she can buy with her paycheck, is gallons of milk per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on a wage with those expectations in mind. If the price level turns out to be lower than expected, a worker's wage is than both the worker and employer expected when they agreed to the wage. Yvette and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 per hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 2%, not 4%. For example, suppose the…
Assume that the supply of electrical technicians is low so a firm hires a group of them at $18 per hour. Two years later, due to a recession, the supply of technicians is high so the market rate for them is now $15 per hour. Should the firm pay new hires $18 or $15? Given that the firm bases pay on supply and demand, should it lower the pay of existing mechanics to $15
Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). If the demand for the product these firms sell increases, so that the market price of this product increases, we would expect which of the following regarding the equilibrium wage, W, and the equilibrium quantity of labor, L, employed? Group of answer choices a) a decrease in W and no change in L b) a decrease in W and a decrease L c) an increase in W and a decrease L d) a decrease in W and an increase L e) an increase in, W, and an increase in L
c. Suppose, as in part b, that there are 100 programmers inelastically supplying labor to the market. Now, head back to the table: About how many programmers will work at Robotron and how many at Korrexia? Again, use your judgment to come up with a good answer. Programmers working at Robotron: Programmers working at Korrexia: d. Suppose 50 more programmers come to town. What will the wage be now? And how many will work at each firm? Equilibrium wage: $ ___ Programmers working at Robotron:___ Programmers working at Korrexia:____
Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class). If a profit-maximizing firm in this market gets an improvement in technology that increases the marginal product of labor for any given unit of labor it employs, and if the market wage stays constant, we would expect the firm to Group of answer choices a) offer a lower wage and hire fewer units of labor. b) hire more units of labor. c) do none of the other options. d) keep the number of units of labor the same. e) hire fewer units of labor (i.e., workers) because it could produce more than before with fewer people.