CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Chapter 17.A, Problem 2ADQ
To determine
The percentage of wage and salary workers who are union members.
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4. Inclusive, or industrial, unions - Negotiating a higher industry wage
Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through
collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it
succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour.
The following graph shows the labor demand of an individual firm.
On the following graph, show what happens at the firm level as a result of the union negotiations.
18
15
Demand
12
Supply
Supply
Demand
3
10
15
20
25
30
QUANTITY OF LABOR
---- ---
Co
WAGE RATE
Complete the following labor supply table for a firm hiring labor competitively: LO17.2
Show graphically the labor supply and marginal resource (labor) cost curves for this firm. Are the curves the same or different? If they are different, which one is higher?
Plot the labor demand data of review question 2 in Chapter 16 on the graph used in part a above. What are the equilibrium wage rate and level of employment?
4. Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equippedwith a shovel, a machete, and a chainsaw. Clearing one acrebrings in $1,000 in revenue. Each worker’s equipment coststhe worker’s employer $150 per month to rent and each workertoils 40 hours per week for four weeks each month. LO17.6 a. What is the marginal revenue product of hiring one lowskilled worker to clear woodland for one month?b. How much revenue per hour does each worker bring in?c. If the minimum wage were $6.20, would the revenue perhour in part b exceed the minimum wage? If so, by howmuch per hour?d. Now consider the employer’s total costs. These includethe equipment costs as well as a normal profit of $50 peracre. If the firm pays workers the minimum wage of$6.20 per hour, what will the firm’s economic profit orloss be per acre?e. At what value would the minimum wage have to be set sothat the firm would make zero economic profit fromemploying an…
Chapter 17 Solutions
CONNECT F/MICROECONOMICS
Ch. 17.3 - Prob. 1QQCh. 17.3 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17.3 - Prob. 4QQCh. 17.A - Prob. 1ADQCh. 17.A - Prob. 2ADQCh. 17.A - Prob. 3ADQCh. 17.A - Prob. 4ADQCh. 17.A - Prob. 1ARQCh. 17.A - Prob. 2ARQ
Ch. 17.A - Prob. 3ARQCh. 17.A - Prob. 4ARQCh. 17.A - Prob. 1APCh. 17.A - Prob. 2APCh. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5P
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- Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired by those employers? Explain briefly.arrow_forwardSuppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equipped with a shovel, a machete, and a chainsaw. Clearing one acre brings in $1,000 in revenue. Each worker’s equipment costs the worker’s employer $150 per month to rent and each worker toils 40 hours per week for four weeks each month. LO17.6 Now consider the employer’s total costs. These include the equipment costs as well as a normal profit of $50 per acre. If the firm pays workers the minimum wage of $6.20 per hour, what will the firm’s economic profit or loss be per acre? At what value would the minimum wage have to be set so that the firm would make zero economic profit from employing an additional low-skilled worker to clear woodland?arrow_forwardIn 2020 in the United States, only about 10.8% of all workers belonged to a labor union. If union membership among workers increased to about 30% (roughly where it was in the 1950s in the US), what effect would we expect this to have? less bargaining power for workers O lower profit share of total income increased income inequality O increased racial and ethnic inequalityarrow_forward
- 5 MC Qu. 16-35 (Algo) Refer to the given table.... Employment 0 1 2 3 4 S 6 Multiple Choice O O Total Product 0 Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $38, it will employ O O 12 22 30 36 40 42 Tworker 2 workers. 3 workers Product Price $5 Sworkers 5 5 5 5 5 5 0arrow_forwardWhich of the following will occur if labour unions successfully negotiate wage increases for its members? O The relative wages in nonunion sectors decrease. Employment likely increases in the union sector, Employment likely decreases in the nonunion sector. The relative wages of nonunion workers also increase.arrow_forwardFigure 13.5 Wage (S) 200- 180- 160- 140- 120- 100 80 60- 40 20 0 MR 10 20 30 40 50 60 70 80 Quantity of labor Reference: Ref 13-7 MC (Figure 13.5) The figure represents a labor union with wage in dollars and quantity of labor in hundreds of hours. If the labor union chooses to maximize total wages, how many workers will it supply? Select one: O A. 4,000 OB. 2,750 O C. 5,000 D. 8,000arrow_forward
- In the figure to the right, suppose that We is a wage rate of $28 per hour and W₁ is a wage rate of $39 per hour. In addition, Quis 12,000 workers per hour, Q is 16,000 workers per hour, and Q is 21,000 workers per hour. How much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage W₁ above the equilibrium wage W? Firms spend a total of $ per hour response as a whole number.) on unionized labor. (Enter your C Wage Rate ($ per hour) Wu We A B S Quantity of Labor per time periodarrow_forwardWhich of the following is a method used by unions to increase the demand for their members' labor? O A. Decrease the marginal product of union members. O B. Oppose minimum wage laws. OC. Oppose immigration restrictions. O D. Support import restrictions. O E. Increase imported goods and servicesarrow_forward# of Workers 1 2 3 4 5 6 Output 3 8 16 21 23 24 MPP MPP: marginal physical product MRP: marginal revenue product MRParrow_forward
- 10 What wage would the union choose if it behaved as a `monopoly union"? What amount of employment would the firm choose in response? Is this outcome on the contract curve? 8 7 Answer: 6 По 5 4 TT Submit Answer 3 2 TT2 1 MRPL 1 3 6 7 8 9. 10 Name an outcome which is a Pareto improvement over the monopoly union outcome. Name an outcome which is Pareto efficient. Answer: If the alternative wage is $3, is this union maximizing the wage bill or economic rent? Answer: Submit Answer Submit Answer Suppose the alternative wage is $7 and the firm and union bargain within a right-to-manage framework. Is the union's preferred outcome within the bargaining range? Answer: Submit Answerarrow_forwardWhat is the marginal cost of labor for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony?arrow_forwardThe following labor market graph applies to questions 13-16. Consider the following competitive labor market situation before and after a tax is levied on labor suppliers. (This would be as if the companies did not withhold any taxes from workers' paychecks. The workers would always be the ones mailing in any taxes owed on their pay from the firms.) W wd Wo Ws L Imp E D(no tax) D. (with tax) L 13. Before the tax is imposed, firms' surplus is given by the area A + B + C. This surplus measures O the workers' addition to profit. O how much the firm is paying the workers. O how much more the workers are getting paid compared the combined minima the workers are willing to work for. O the firms' combined revenues. O the size of the wage.arrow_forward
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