Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 11, Problem 6P
To determine
Which salary scheme will enable more workers to work 50-hour a week.
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For a long time, your firm has been paying its workers a wage of $20 per hour, and your employees have been happy to work 40 hours per week at this wage. Business is suddenly booming, and your firm would really like your workers to agree to a 50-hour work week to meet this new demand for your product. You are considering two strategies. Under the first, you would raise the wage for all hours worked from $20 per hour to $22 per hour; under the second, you would leave the wage for the first 40 hours per week at $20 but offer $30 per hour for hours worked above 40 hours (that is, you would offer time-and-a-half for overtime). Both strategies have the same cost of $1,100 if a worker chooses to work 50 hours. Which strategy is more likely to lead your employees to agree to a 50-hour work week?
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
Before Fair Work Commission in Australia announced its formal decision to increase Australian minimum wage by 5.2 percent, the following prominent politician and peak bodies voiced their opinion on their desired increase for Australia’s minimum wage rate:
● In April 2022, the Australian Council of Trade Unions (ACTU) urged for an increase of 5.5 percent for minimum wage rate.
● In May 2022, the Australian Chamber of Commerce and Industry (ACCI) proposed an increase of 3 percent for minimum wage rate.
● In May 2022, current Prime Minister Anthony Albanese said during the federal election campaign he wanted the minimum wage increase to be 5.1 percent.
On 15 June 2022, Fair Work Commission in Australia announced its formal decision to increase Australian minimum wage by 5.2 percent.
Questions
3.1 Using a diagram, explain and illustrate the economic impact of this increase of 5.2% in the minimum wage rate on the Australian labour market. (Note: Your group must draw a diagram that shows…
Chapter 11 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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