Sector 1 (union) Sector 2 (nonunion) W. W. D2 Employment Employment Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical. Initially the quantities of labor employed in the two sectors are Ly and Ly, and the wage rate in each sector is W, all the workers who lose their jobs in the union sector because of a Wn to Wy union wage increase are reemployed in nonunion sector 2, output in that sector will

Sector 1 (union) Sector 2 (nonunion) W. W. D2 Employment Employment Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical. Initially the quantities of labor employed in the two sectors are Ly and Ly, and the wage rate in each sector is W, all the workers who lose their jobs in the union sector because of a Wn to Wy union wage increase are reemployed in nonunion sector 2, output in that sector will

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.8P

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provide an isoquant/isocost analysis diagram explaining the possible impact of the higher wages onthe output level, total cost of production and input-factor mix of this business in boththe short and long-run estimated that the wage elasticity of labour demand is -1.7
From the table below, what can you infer is the market price in dollars of the product? (# of Labor inputworkers) Total product(# of goods) Marginal Product of Labor (MPL) Marginal Revenue Product of Labor (MRPL) 0 0 - - 1 12 12 $24 2 21 9 $18 3 28 7 $14 4 32 4 $8 5 35 3 $6
QUESTION TWOa) Given labour demand curve LDi = 40 − 5wi + 2wj, and wages labour market I and labour market j are wi = K5 and wj = K3 respectively. At the existing wages in labour market I and j, calculate;i. The own wage elasticity of labour demand.ii. Cross elasticity of demand.iii. Is this a well behaved labour demand function?iv. What is the nature of relationship between labour market i and labour market j.b) Discuss the relationship between slope and elasticity of labour demand curve.c) Explain using an example of your choice how technological innovations have the potential to change the structure of demand in the labour market.
At the bottom of the page, complete the labor demand table for a fifirm that is hiring labor competitively and selling its product in a competitive market.a. How many workers will the firm hire if the market wage rate is $27.95? $19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each of these wage rates.b. Show in schedule form and graphically the labor demand curve of this firm.c. Now again determine the firm’s demand curve for labor, assuming that it is selling in an imperfectly competitive market and that, although it can sell 17 units at $2.20 per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit. Compare this demand curve with that derived in question 2b (part b of this question). Which curve is more elastic? Explain.
ASAP PLZ 1)Consider the involuntary unemployment game played between a firm and a worker who has the opportunity to shirk. Suppose that the firm’s profit function is given by V = (LE)0.5 –WL, and a typical worker’s utility function is written as U = W(1 – 0.75 E), where 0 ≤ E ≤ 1 is the effort index, L is the total labor force in the firm, and W is the unit cost of labor. Suppose also that the probability of being caught is equal to 1 – E. A) Based on the worker’s expected utility function, find the worker’s optimal effort. B) Find the firm’s optimal wage and employment level.
how does equilibrium in a labour market with a monopsony employer change if a minimum wage is set at a competitive level. show using diagrams Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.
Explain how and why the method of instrumental variables allows us to estimate the labor demand elasticity.
Assume that tighter immigration laws cause a reduction in the supply of agriculturalworkers and this leads to higher wages in the sector. Dean’s Fruity Produce Ltd, afarm in Leicestershire, uses two inputs to harvest its output – machines (capital) andagricultural workers. Dean, the managing director of the company, has employedKarishma (a brilliant statistician) and she has estimated that the business’s long-runwage elasticity of labour demand is -1.7. Using isoquant/isocost analysis, explain the possible impact of the higher wages on the output level, total cost of production and input-factor mix of this business in boththe short and long-run and how would your answer change if Karishma had estimated that the long-run wageelasticity of labour demand was -0.4? (1000 words)
QUESTION TWOa) Given labour demand curve LDi = 40 − 5wi + 2wj, and wages labour market I and labour market j are wi = K5 and wj = K3 respectively. At the existing wages in labour market I and j, calculate;i). What is the nature of relationship between labour market i and labour market j.ii) Discuss the relationship between slope and elasticity of labour demand curve.
Provide ONE labor demand-side reason that would explain why equilibrium wage (W*) rates in two different labor markets(i.e., occupations), might be moving in opposite directions— one rising quickly while the other is falling, widening disparities in worker earnings. Then, provide a role for “compensating wage differentials” or for “efficiency wages” to explain this widening disparity.
Follow-up questions. d. Let D be the difference in marginal product between an experienced worker and a new worker (MPe − MPn). Suppose that robust, experienced workers would prefer not to pool with sickly workers at their firm, and so they seek out a new job with an employer who does not offer health insurance. What will be the wage of the robust worker at the new job during the first year there? Keep in mind, these workers will no longer be experienced because they will be adapting to a new firm. Under what conditions will it make financial sense for the robust worker to change jobs? Your answer should be an inequality that includes D, θ, Vr, and Vs. e. D is a measure of job-specific human capital; as workers learn the job, they become more productive so D > 0. However, not every job or industry has the same value for D. In some lines of work D is low, while in others D is high, simply because of the nature of the work. Given the results, you have seen in this problem, in which…
Alternative explanations of wage disparities Suppose that a labour economist finds that one of her research subjects has earned significantly higher wages throughout his lifetime than would be predicted by standard measured variables. The economist also noted that each of the subject's positions was found through connections at his family's exclusive country club. Which one of the following most likely explains this person's unusually high earnings? a) Effort b) Compensating differentials c) Chance d) Efficiency wages Suppose that Frances receives higher pay at her workplace than her colleagues do, even though they perform essentially the same type of work. If Frances's productivity is about 25% higher than that of each of her colleagues, which of the following wage concepts can explain this wage disparity? Check all that apply. a) Efficiency wages b)The superstar phenomenon c) Discrimination d) Human capital e)…