Q.7.1.1 Assume the market demand curve is D1, the market supply curve is S and equilibrium is at E. Now the market wage rate paid to truck drivers increases from R250 to R300. Identify the type of disequilibrium that will result from such a wage increase. Q.7.1.2 Determine the size of the disequilibrium that will result from an increase in the wage rate from R250 to R300. Q.7.1.3 Assume market equilibrium is at E1 at the intersection of D1 and S. Now the demand curve shifts from D1 to D2 on the graph. Identify any three factors that could result in this increase in the demand for truck drivers.
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- Suppose that the production function of a salmon farming firm is given by F(L) = 4*root(L) and it faces a price for its product of P = 200. Moreover, the firm acts as a monopsony in the labour market - located in a small town in the south - and the supply curve is w(L) = 3 + L. We ask: (a) Determine the output and level of hiring. (b) How many workers should this firm hire from the point of view of the social optimum?In a purely competitive labor market (a), market labor supply S and market labor demand D determine the equilibrium wage rate Wc and the equilibrium number of workers Qc . Each individual competitive firm (b) takes this competitive wage Wc as given. Thus, the individual firm’s labor supply curve s = MRC is perfectly elastic at the going wage Wc . Its labor demand curve, d, is its MRP curve (here labeled mrp). The firm maximizes its profit by hiring workers up to where MRP = MRC. Area 0abc represents both the firm’s total revenue and its total cost. The green area is its total wage cost; the blue area is its nonlabor costs, including a normal profit—that is, the firm’s payments to the suppliers of land, capital, and entrepreneurship. This firm’s labor demand curve d in graph (b) slopes downward because: a. the law of diminishing marginal utility applies. b. the law of diminishing returns applies. c. the firm must lower its price to sell additional units of its product. d. the firm is a…In a purely competitive labor market (a), market labor supply S and market labor demand D determine the equilibrium wage rate Wc and the equilibrium number of workers Qc . Each individual competitive firm (b) takes this competitive wage Wc as given. Thus, the individual firm’s labor supply curve s = MRC is perfectly elastic at the going wage Wc . Its labor demand curve, d, is its MRP curve (here labeled mrp). The firm maximizes its profit by hiring workers up to where MRP = MRC. Area 0abc represents both the firm’s total revenue and its total cost. The green area is its total wage cost; the blue area is its nonlabor costs, including a normal profit—that is, the firm’s payments to the suppliers of land, capital, and entrepreneurship. The supply-of-labor curve S slopes upward in graph (a) because: a. the law of diminishing marginal utility applies. b. the law of diminishing returns applies. c. workers can afford to “buy” more leisure when the wage rate increases. d. higher wages are…
- In a purely competitive labor market (a), market labor supply S and market labor demand D determine the equilibrium wage rate Wc and the equilibrium number of workers Qc . Each individual competitive firm (b) takes this competitive wage Wc as given. Thus, the individual firm’s labor supply curve s = MRC is perfectly elastic at the going wage Wc . Its labor demand curve, d, is its MRP curve (here labeled mrp). The firm maximizes its profit by hiring workers up to where MRP = MRC. Area 0abc represents both the firm’s total revenue and its total cost. The green area is its total wage cost; the blue area is its nonlabor costs, including a normal profit—that is, the firm’s payments to the suppliers of land, capital, and entrepreneurship. A rightward shift of the labor supply curve in graph (a) would shift curve: a. d = mrp leftward in graph (b). b. d = mrp rightward in graph (b). c. s = MRC upward in graph (b). d. s = MRC downward in graph (b).Consider a worker/consumer with non-labor income, V, of 2 dollars. Time endowment is T=24 and denotes labor supply by h. Suppose the hourly wage is 5, and the consumption good's price is 1. Suppose that the optimal labor supply (given the prices) is h*=8. Suppose that the worker is offered the following contract: For every one of the first 8 hours, the wage per hour is 5. If the worker chooses to work for more than 8 hours the wage rate is 10 for each extra hour (above 8). A new graph depicts the budget set. Can you determine how labor supply changes? (comparing it to the case in which the wage rate is fixed at 5 dollars per hour)..Brenda owns a construction company that employs bricklayers and other skilled tradesmen. Her firm’s MRP for bricklayers is $22.25 per hour for each of the first seven bricklayers, $18.50 for an eighth bricklayer, and $17.75 for a ninth bricklayer. Given that she is a price taker when hiring bricklayers, how many bricklayers will she hire if the market equilibrium wage for bricklayers is $18.00 per hour? a. Zero. b. Seven. c. Eight. d. Nine. e. More information is required to answer this question
- A worker receives CAD 3,000 of lump-sum transfers from the government annually andhas 4,160 available hours per year. She is currently working 2,200 hours per year at the wage rateof CAD 20.00 per hour. After being promoted, her wage rate increases to CAD 25.00 per hour,and she decides to work 2,700 hours. She is indifferent between her original work decision andworking 2,850 hours at CAD 25.00 per hour.1. What is the compensated wage elasticity of labor supply implied by her response to thewage increase? Is the compensated labor supply elastic or inelastic?2. What is the uncompensated wage elasticity of labor supply implied by her response to thewage increase? Is the uncompensated labour supply elastic or inelastic?3. Why are these elasticities different?Assume that the marginal cost of hiring additional labor (MCL), the market supply of labor (SL), and the market demand for labor (DL) are determined by the following equations, where w refers to wage and L refers to labor: MCL: w=2+7L SL: w=2+5L DL: w=42−3L Determine how many workers stay unemployed under a monopsony as compared with a perfectly competitive market, assuming firms want to maximize profits in both situations. Write the exactThe total product of the 10 employees of ABC is 10,000 bags. The firm is considering employing a Chinese worker whose marginal product is 900 bags. Each bag is sold at K10 and all the workers are paid a flat wage of K8, 900.A. What is the average product before and after this worker is employed?B. Should ABC employ the new Chinese worker? C. What is the minimum marginal product that ABC can accept for any additional worker under the prevailing price and wage rate?
- A household's reservation wage is the ________. Group of answer choices lowest wage rate at which an individual will supply labor highest wage rate at which the individual will supply labor wage rate at which the individual’s income is largest wage at which the individual’s labor supply curve bends backward Quantity of labor (workers) Output (units) Marginal Product of Labor (dollars) 0 0 0 1 10 $100 2 18 $80 3 24 $60 4 28 $40 5 30 $20 Given the production and revenue data in the above table, if the wage rate is $50 per worker, how many workers will be hired? Group of answer choices 5 4 2 3 Please answer to two of these questionsIf there are N identical workers in the economy, each with the (inverse) labor supply of w=3h+10. The market (inverse) labor supply is w=0.01h+10. What is N?Let’s say we extend the the standard 1 person static labor supply problem instead to a family with two people making money. In the family of two money makers, given as person 1 and person 2, the given utility function is u(c1 + c2, l1, l2). Utility is defined as a function of the sum of goods consumed by the two people in the family, and of each person’s leisure time. Each person has a time endowment of “Ti” and gets a wage “wi”, where i = 1, 2. The two person family has a non-labour income defined y (which means this is the income of the family whether or not they work) and face price “p” for consumption goods. How can I utilize the Slutsky equation to show how the labour supply of 2 changes with w1? Thank you!