Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 7P
(a)
To determine
Explain the drop of wage demand from $10 to $5.
(b)
To determine
Effect of increasing the strike length in the wage demand.
(c)
To determine
Effect of increasing the strike length in the wage demand.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Consider the labour markets for skilled labour and unskilled labour.
The labour demand curve for skilled workers is given by w = e(150 - 5L)/100. The labour demand curve for unskilled workers is w = 50 - 2L. The labour supply for each of the two labour markets is given by L = 20.
The effort of firm's skilled workers depends on their wage according to the following schedule:
wage (w)
20
25
30
35
40
45
Effort (e)
16
24
30
34
36
36
a) Calculate the equilibrium employment, unemployment, and wage for unskilled workers.
b) Calculate the profit-maximizing contract (w,e).
c) Calculate the equilibrium employment, unemployment, and wage for skilled workers.
d) In a single labeled graph in (w - L), illustrate the labour market equilibria for skilled and unskilled workers.
e) Calculate the cumulative income distribution for each labour market by reporting the cumulative shares for the following percentiles: 50% and 100%.
f) In a single graph, construct the Lorenz curve representing labour…
Listed are scenarios that may lead to changes in labor market conditions for chefs. Use your knowledge of labor demand and
supply curves to match each scenario to the appropriate category.
Will cause a shift in the
demand for labor
Will cause a shift in the
supply of labor
Will cause a shift in both
the demand for labor and
supply of labor
Will not result in a
curve shifting
A professional cooking tool is
invented that reduces the
number of chefs required to
produce many dishes.
The amount of training required
to work as a chef increases.
Wages for chefs increase.
Answer Bank
Hand written solutions are strictly prohibited
Chapter 10 Solutions
Labor Economics
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
Knowledge Booster
Similar questions
- If the bargaining power of the workers increases due to the unions becoming stronger: A) The wage setting curve shifts downward B) The price setting curve shifts downward C) The price setting curve shifts upward D) The wage setting curve shifts upwardarrow_forwardSuppose that you have the following information about the market for players on your team: Supply: W=5+N Demand: W=35-2N a. Draw this graphically and calculate the equilibrium wage and number of players on the team. b. Suppose that the players union negotiates a roster size of only 5 players on a team. Draw this graphically and calculate the new equilibrium wage number of players on the team.arrow_forwardSay the average increase in pay for non-union workers in 2011 is 2% across the U.S. If a workers' union successfully negotiates a 3-year collective agreement that provides a 4.5% raise in 2011, and a 4.3% raise in 2013, then the for-profit employer will typically Question 42 options: begin to fire its older union workers. replace union workers with non-union workers. curtail expansion of labor as a trade-off. replace union workers with foreign workers.arrow_forward
- QUESTION 19 Refer to the following diagram. Wages in both the union and nonunion sectors are initially $10. The union then negotiates a wage rate of $12. The post-negotiation nonunion wage is not yet known. Union $12 $10 S VMP Labor $10 Nonunion VMP Labor The product-market effect would be modeled by shifting the nonunion supply curve to the right, increasing the measured union wage advantage. nonunion demand curve to the right, reducing the measured union wage advantage. Ⓒ union demand curve to the right, increasing the measured union wage advantage. union supply curve to the right, reducing the pure union wage advantage.arrow_forwardQ8 In the Canadian labour market, demand for labour can be impacted by elasticity of the product in which labour is an input. Suppose that the labour cost to total cost ratio in industry A (cannabis sector) is 14 percent, while in industry B (fertilizer sector) it is 68 percent. Other things equal, labour demand will be Multiple Choice more elastic in industry B than in A. constant in both industries A and B. relatively elastic in both industries A and B. relatively inelastic in both industries A and B. more elastic in industry A than in B.arrow_forwardThe table below shows the quantity demanded and supplied at various wage rates for a competitive market. Wage Rate Quantity of Workers Demanded Quantity of Workers Supplied $100 5 50 90 10 45 80 20 40 70 35 35 60 50 30 If the workers form a union and negotiate a weekly wage of $90, how many workers will be supplied and demanded? Multiple Choice The quantity demand will be 10 and the quantity supplied will be 35. The quantity demanded will be 10 and the quantity supplied will be 45. The quantity demand and supplied will both be 35. The quantity demanded will be 35 and the quantity supplied will be 45.arrow_forward
- Consider a union that bargains over Wages (W) and employment (E). 1. Draw a diagram that illustrates the set of efficient contracts. Be sure your diagram also includes: at least 2 firm isoprofit curves; at least 2 union indifference curves; the labour demand curve 2. Now describe the location of the contract curve relative to the labour demand curve and the isoprofit curves and explain the intuition behind this location on the grapharrow_forwardIn 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…arrow_forwardIn 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).arrow_forward
- 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…arrow_forwardThe market for plumbers in Boston is currently in equilibrium. Labor supply is given by Ls = 3 x W and labor demand is given by Ld = 45 - W (where L = quantity of workers, Ls quantity of workers supplied, Ld = quantity of workers demanded, and W = wage). The plumbers have just unionized and have negotiated a wage of $25 for all plumbers in Boston. How many plumbers do you expect to be unemployed as the result of this change? Please round your answer to the nearest integer. %3D %3D %3Darrow_forwarddarsh is tasked with projecting financial compensation policy strategies for new hires in his relatively successful medium sized distillery. Given that the labor market seems steady and stable, the most likely strategy darsh will utilizie for compensation policy is: market lead market match market lag pay mixarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage LearningMicroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning