EBK STUDY GUIDE FOR MANKIW'S PRINCIPLES
7th Edition
ISBN: 9781337509848
Author: Mankiw
Publisher: VST
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Chapter 19, Problem 8PA
To determine
Discrimination and wage differential.
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Explain your answer comprehensively about the question stated below:
Suppose Congress were to mandate that all employers had to offer their employees a life insurance policy worth at least $50,000. Use Economic Theory and concepts, both positively and normatively, to analyze the effects of this mandate on employee well-being.
What effect does this mandate have on the demand for labor? Use also curve to demonstrate the answer.
Please answer
11. Problems and Applications Q13
Suppose that Parliament passes a law requiring employers to provide employees some benefit (such as dental care) that raises the cost of an
employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation.
On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labour.
Wage (Dollars per hour)
20
18
16
14
12
10
8
4
2
0
Demand
+
0 1
+
2
3 4 5 6 7
Quantity of Labour
8
Supply
9 10
New Demand
New Supply
Equilibrium Before Law
Suppose employees place a value on this benefit exactly equal to its cost.
Equilibrium After Law
(?)
Chapter 19 Solutions
EBK STUDY GUIDE FOR MANKIW'S PRINCIPLES
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- According to David Ewing, two factors explain the absence of civil liberties and the prevalence of authoritarianism in the workplace. Which of the following is one of them? a. the repeal of the Wagner Act b. discriminatory employment practices due to the passage of the Taft-Hartley Act c. employer resistance to unionization d. the rise of personnel engineering and professional managementarrow_forwardSome economists argue that unions raise prices and cause unemployment by bargaining for higher wages than would otherwise be the case. Other economists argue that this is not true. Who is right and why? Solve within one hourarrow_forwardConsider a third pricing scheme that the union in Solved Problem 12.2 might use. It sets a wage, , and lets the firms hire as many workers as they want (that is, the union does not set a minimum number of hours), but requires a lump-sum contribution to each worker’s retirement fund. What is such a pricing scheme called? Can the union achieve the same outcome as it would if it perfectly price discriminated? (Hint: It could set the wage where the supply curve hits the demand curve.) Does your answer depend on whether the union workers are identical? Solved Problem 12.2 Competitive firms are the customers of a union, which is the monopoly supplier of labor services. Show the union’s “producer surplus” if it perfectly price discriminates. Then suppose that the union makes the firms a take-it-or-leave-it offer: They must guarantee to hire a minimum of hours of work at a wage of , or they can hire no one. Show that by setting appropriately, the union can…arrow_forward
- Is the decision of mcdonalds to hire fewer workers because of an increase of minimum wage due to microeconomics or macroeconomics?arrow_forwardWhat economic principle justifies the high salaries of some professional athletes? Suppose the manager of a baseball team wants to hire a new pitcher for $4 million per year. Under what circumstances would it make sense for the team to do so?arrow_forwarda) Suppose that there is an excess supply of economics professors. Should universities necessarily reduce salaries? What does standard economic theory suggest? What does efficiency-wage theory suggest (Explain with diagram). b. Briefly describe how labor unions can affect wages in non-unionized industries.arrow_forward
- c. Suppose, as in part b, that there are 100 programmers inelastically supplying labor to the market. Now, head back to the table: About how many programmers will work at Robotron and how many at Korrexia? Again, use your judgment to come up with a good answer. Programmers working at Robotron: Programmers working at Korrexia: d. Suppose 50 more programmers come to town. What will the wage be now? And how many will work at each firm? Equilibrium wage: $ ___ Programmers working at Robotron:___ Programmers working at Korrexia:____arrow_forwardUse the data in Table: Larry's Lawn Mowing to answer the question. Table: Larry's Lawn Mowing (price = $30) Number of workers (weekly wage $540) Marginal product Marginal revenue (weekly) 24 product $720 $540 1 18 3. 14 $420 4 10 $300 If Larry uses the Rational Rule for Employers, how many workers will he hire? one four three twoarrow_forwardIn general, the pay level of medical doctors is higher than that of janitors. How can the difference in the pay level be explained from the economics model of pay perspective? O Due to the required skills and certifications to be a doctor being much more difficult to obtain, there is more demand of labor for doctors than janitors. O Due to the required skills and certifications to be a doctor being much more difficult to obtain, there is less supply of labor for doctors than janitors. O Due to the required skills and certifications to be a doctor being much more difficult to obtain, there is less demand of labor for doctors than janitors. O Due to the required skills and certifications to be a doctor being much more difficult to obtain, there is more supply of labor for doctors than janitors.arrow_forward
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