MICROECONOMICS CUSTOM SMC >BI<
21st Edition
ISBN: 9781307055320
Author: McConnell
Publisher: MCG/CREATE
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Question
Chapter 23, Problem 6RQ
To determine
The discrimination coefficient and the demand curve.
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Brenda owns a construction company that employs bricklayers and other skilled tradesmen. Her firm’s MRP for bricklayers is $22.25 per hour for each of the first seven bricklayers, $18.50 for an eighth bricklayer, and $17.75 for a ninth bricklayer. Given that she is a price taker when hiring bricklayers, how many bricklayers will she hire if the market equilibrium wage for bricklayers is $18.00 per hour? a. Zero. b. Seven. c. Eight. d. Nine. e. More information is required to answer this question
Suppose that the wage rate is $13 per hour and the price of the product is $2. Values for output and labor are in units per hour.
b.
L
0.
24
44
60
72
80
4
84
Find the profit-maximizing quantity of labor. (Assume the firm can hire up to 6 workers.)
The profit-maximizing quantity of labor is worker(s). (Enter a numeric response using an integer.)
Suppose that the price of the product remains $2 but that the wage rate increases to $36. Find the new profit maximizing level of L
The profit-maximizing quantity of labor is
worker(s).
Suppose that the price of the product decreases to $1 and the wage remains at $13 per hour. Find the new profit-maximizing L.
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?
Chapter 23 Solutions
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- Suppose that the wage rate is $47 per hour and the price of the product is $2. Values for output and labor are in units per hour. b. L 48 88 2. 120 144 4 160 168 Find the profit-maximizing quantity of labor. (Assume the fim can hire up to 6 workers.). The profit-maximizing quantity of labor is worker(s). (Enter a numeric response using an integer.) Suppose that the price of the product remains $2 but that the wage rate increases to $77. Find the new profit maximizing level of L. The profit-maximizing quantity of labor isworker(s). Suppose that the price of the product decreases to $1 and the wage remains at $47 per hour. Find the new profit-maximizing L. The profit-maximizing quantity of labor is worker(s).arrow_forwardQuestion 14 Human capital is H-e0.07*5), where S is the number of years of schooling. What is the ratio of the productivities of the persons having 9 and 12 years of schooling, respectively. Hint: This will be the ratio of their wages in the competitive labor ratio of their wages in the competitive labor market. O 0.81 0.95 O 1.03 O 1.54arrow_forwardMary's employer is considering her for a firm-specific training program that will cost $4 per hour. Her current marginal revenue product is $20 per hour and will rise to $25 upon completion of the program. Of the following, Mary's training and posttraining wage, respectively, will most likely be O $20 and $25 O $16 and $25 O $20 and $ $21 O $16 and $21arrow_forward
- Figure 3.2 S1 15- Sa 10 5+-: Da Di 20 30 40 Quantity of Labor In Figure 3.2, if the market is in equilibrium with 30 workers at a wage rate of $15 per day, which of the following must be the corresponding labor supply and demand curves when technology improves? S1 and D1 O S2 and D1 O Cannot be determincd from the information given O$2 and D2 Wage Rate ($ per day) 藝arrow_forward00 LO %24 WAGE 7. Shifts in labor supply Assume that the consulting and information technology industries employ people with similar skills. Suppose an increase in the demand for computer analysts leads to a rise in their wages, while the demand for consultants remains the same. The following graph shows the labor market for consultants in the United States. Show the effect of the rise in demand for computer analysts on the U.S. labor market for consultants by shifting the labor demand curve, the labor supply curve, or both. Supply Demand Supply Demand LABOR MacBook Pro * > %23 3. 4. R. A S K ב B.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
- Consider an individual who was employed prior to having a child. Now, they face daycare costs (M) if they choose to go back to work. Assume that they earn an hourly wage (W) and their non-labour income (YN) is greater than their daycare costs (YN > M). Despite the daycare costs, this individual chooses to work T-Lo hours per week. Draw a graph that reflects this individual's income- leisure constraint (both with and without daycare costs), utility-maximizing indifference curve (Uo) and choice of leisure hours (Lo).arrow_forwardLabor demand and supply of labor is one of the external factors that impact compensation practices. If supply of labor is less than the labor demand, most employers offer to jobseekers. Higher rate Going rate Lower rate Market rate A clothing manufacturing utilizes Merrick's Multiple Piece Rate System that sets the standard output to 100 units per week and normal piece rate at 5 RO per unit. If Worker Z's actual weekly output is 100 units, solve earning per week. 650 О 500 O 550 O 600 ооо оarrow_forwardSuppose that in Workaholia the total population = 180 million, the number of unemployed = 5 million, and the labor force = S5 million. What is the employment to population ratio in Workaholia if 60 million people are ineligible to work? Select one: O a. 50.0% O b. 55.5% Oc 61.2% O d. 41.7% O e. 68.4%arrow_forward
- 11-8. A firm can hire as much labor as it wants at $5 per hour. In return, each worker pro- duces 10 units of output per hour. The firm can sell up to 2,500 units of output each day at $2 per unit, but it cannot sell any more than 2,500 units of output in a day. The firm has no other costs besides labor. (a) How many hours of labor does the firm purchase and how much profit does it earn each day? (b) The firm can choose to pay an efficiency wage. In particular, the firm can choose to pay $6, $7, $8, $9, or $10 per hour, and in exchange, each worker will produce 18, 23, 27, 28, or 29 units of output per hour, respectively. What hourly wage should the firm offer to maximize profits?arrow_forward2. Complete the following labor demand table for a firm that is hiring labor competitively and selling its product in a competitive market: Now assume that the firm is selling in an imperfectly competitive market and that, although it can sell 17 units for $2.20 per unit, it must lower product price by 5 cents in order to sell the marginal product of each successive labor unit (that is to sell 31 units of output it has to lower the price to $2.15, etc). Use the table above to calculate the firm's demand curve under this assumption. Make sure to put the appropriate price for each product level. Plot the two demand curves. Which curve is more elastic? If the market wage is $19.95, how many workers will each firm hire? Explain your answer.arrow_forwardLO. Graphically illustrate the labor market's situation in case of a minimum wage enforcement. Discuss with at least 200 words.arrow_forward
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