Suppose there are 94 workers in the economy, with overall labour supply LS-94. The labour demand in Sector A is given by LDA-120-2.3WA and labour demand in Sector B is given by LDB-94-3.9WB- When graphed with the conventional axes, the slope of the aggregate labour demand curve is -6.2 Assuming the neoclassical model of perfect competition holds, the competitive wage would be w=$ Suppose sector A unionizes and sets the wage at $30. Sector A will employ 51 13.363 will spill over into sector B is equal to equal to $ 13.08 In this economy the union density is 54.26 The relative wage gap for union workers is 56.5 40 . There will now be 43 If the contract curve is vertical when the wage is set at $30, 24.19 workers. The number of workers previously employed in sector A who workers employed in sector B. The wage in sector B will be %. and its vertical intercept is 214 % while the relative wage gain is 43.5 %. The counterfactual wage is $ workers will spill over into sector B and the wage in sector B will be wg=$ If the contract curve is not vertical, but 7 workers decide to wait in unemployment in sector A, the wage in sector B will be wg=$

Suppose there are 94 workers in the economy, with overall labour supply LS-94. The labour demand in Sector A is given by LDA-120-2.3WA and labour demand in Sector B is given by LDB-94-3.9WB- When graphed with the conventional axes, the slope of the aggregate labour demand curve is -6.2 Assuming the neoclassical model of perfect competition holds, the competitive wage would be w=$ Suppose sector A unionizes and sets the wage at $30. Sector A will employ 51 13.363 will spill over into sector B is equal to equal to $ 13.08 In this economy the union density is 54.26 The relative wage gap for union workers is 56.5 40 . There will now be 43 If the contract curve is vertical when the wage is set at $30, 24.19 workers. The number of workers previously employed in sector A who workers employed in sector B. The wage in sector B will be %. and its vertical intercept is 214 % while the relative wage gain is 43.5 %. The counterfactual wage is $ workers will spill over into sector B and the wage in sector B will be wg=$ If the contract curve is not vertical, but 7 workers decide to wait in unemployment in sector A, the wage in sector B will be wg=$

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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