close solutoin list

Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Let’s consider the effects of such a policy on the labor market. a. Suppose that a law required firms to give each worker $3 of fringe benefits for every hour that the worker is employed by the firm. How does this law affect the marginal profit that a firm earns from each worker at a given cash wage? How does the law affect the demand curve for labor? Draw your answer on a graph with the cash wage on the vertical axis. b. If there is no change in labor supply how would this law affect employment and wages? c. Why might the labor-supply curve shift in response to this law? Would this shift in labor supply raise or lower the impact of the law on wages and employment? d. As discussed in Chapter 6, the wages of some workers, particularly the unskilled and inexperienced, are kept above the equilibrium level by minimum-wage laws. What effect would a fringe-benefit mandate have for these workers?

BuyFind

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305156050
BuyFind

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305156050

Solutions

Chapter
Section
Chapter 18, Problem 9PA
Textbook Problem

Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Let’s consider the effects of such a policy on the labor market.

a. Suppose that a law required firms to give each worker $3 of fringe benefits for every hour that the worker is employed by the firm. How does this law affect the marginal profit that a firm earns from each worker at a given cash wage? How does the law affect the demand curve for labor? Draw your answer on a graph with the cash wage on the vertical axis.

b. If there is no change in labor supply how would this law affect employment and wages?

c. Why might the labor-supply curve shift in response to this law? Would this shift in labor supply raise or lower the impact of the law on wages and employment?

d. As discussed in Chapter 6, the wages of some workers, particularly the unskilled and inexperienced, are kept above the equilibrium level by minimum-wage laws. What effect would a fringe-benefit mandate have for these workers?

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
In what ways is economics a science?

Principles of Economics (MindTap Course List)

What are the advantages of a corporation?

Foundations of Business (MindTap Course List)

What is the purpose of the statement of shareholders equity?

Intermediate Accounting: Reporting And Analysis

RATIO CALCULATIONS Graser Trucking has 12 billion in assets, and its tax rate is 40%. Its basic earning power (...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)