Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 18, Problem 4CQQ
To determine
Technological advancement and productivity.
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Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print. Now suppose during the holiday season the price of poster-size copies increases to $12. What happens?
The demand for labor decreases
The demand for labor increases
The quantity demanded of labor decreases but the demand for labor curte does not shift
The quantity demanded of labor increases, but the demand for labor curve does not shift
As the productivity of labor rises, so will the demand for labor.
True – False: Explain
What is the income effect when studying the supply of labor?
A. a decrease in number of hours raises utility
B. at greater incomes, workers purchase more goods
C. as wage increases, workers choose to work fewer hours
D. as wage increases, workers choose to work more hours
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- Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?arrow_forwardName some factors that can cause- a shift in the supply curve in labor markets.arrow_forwardHow would I analyze how the equilibrium wage and number of working hours will change when a company has a great demand for workers (i.e. grocery stores now) yet some current workers don't want to work as many hours? How would I explain the three cases that would depend on the relative size of change in labor demand and labor supply? For example. Case 1. Change in supply(∆LS)| = |Change in Demand(∆LD )| . Case 2: |∆LS| > |∆LD| . Case 3: |∆LS| < |∆LD| I'm trying to understand how the equilibrium wage and number of working hours will change under these different scenarios. Thanksarrow_forward
- True or false explain this a) In a competitive labor market, the price of labor is determined by the industry that hires the labor.arrow_forwardA technological advance that increases the marginalproduct of labor shifts the labor- _________ curve tothe _________.a. demand; leftb. demand; rightc. supply; leftd. supply; rightarrow_forwardWhen the supply curve is upward sloping, by practicing the minimum wage law a surplus is created in the economy. What happens when the labour supply curve is vertical? Does it still have a surplus? Surplus of what? Also, when a minimum wage law is imposed in the labour market, despite of the effects in the economy, why do the producers argue for a wage rise? Draw relevant diagram and discuss all the points raised above.!arrow_forward
- When is an employer forced to keep the labor cost low? A. When the product demand is inelastic. B. When the employer is in a competitive product market. C. When the rate of unemployment is low. D. When certain skills are essential for production.arrow_forwardSolve Input demand and input supply Item1 : Good Q , L labor ,W wage ,A level of technology Q=A0K^alpha L^beta Q=80-P A0=1 K =36 unit L =40+0.5w alpha =0.5 beta =0.5 1. From the condition and price of the labor market equilibrium quantity in item 1, assuming that the price of good Q increases by 10% of the price of P0 Show the change in the price of the labor factor. and the amount of labor factor to be traded in the labor market And along with calculating the income size of both buyers and sellers, labor factors that should be relied on 2.Summarize the theoretical principles of the properties of demand. in factors of production and the factors affecting the change in the price of production factors are obtained when the price of production changes, the quantity of capital k changes, and the level of technology. as well as the supply characteristics of the changing factorsarrow_forwardThe equilibrium quantity of labor increases and the equilibrium wage decreases when: A) labor supply shifts to the right, if wages are flexible, B) labor supply shifts to the left, if wages are flexible. C) labor demand shifts to the left, if wages are flexible. D) labor demand shifts to the right, if wages are flexible.arrow_forward
- In a particular industry, labor supply is ES = 10 + w and labor demand is ED = 40 - 4w,where E is the level of employment and w is the hourly wage.(a) What is the equilibrium wage and employment if the labor market is competitive?arrow_forward(c) Let us now turn to the labor market for grocery store workers in Little town. Recently one of the last two grocery stores in Little town closed leaving only one employer for grocery store workers in this area. This labor market is not very competitive. What type of market structure is this? (d) Draw a typical supply curve (i.e. average expenditure), marginal expenditure, and demand for the grocery store in Little Town. Label the equilibrium wage and number of grocery store workers. (e) Suppose that some time has passed and the population has grown in Little Town and there are now many grocery stores. Now suppose that the grocery store workers unionize. Draw a graph to depict the equilibrium wage and number of workers in this new market.arrow_forward(a) If WM = Wp, from what type of labor market does the firm hire its workers? (b) Assume the productivity of workers increases as a result of improvement in technology. What will happen to each of the following in the short run? The market demand for labor (ii) The wage rate the firm will pay. Explain.arrow_forward
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