Labor Economics
8th Edition
ISBN: 9781260484434
Author: George Borjas
Publisher: Mcgraw-hill Higher Education (us)
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Chapter 4, Problem 9RQ
To determine
The cobweb model for engineering market.
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Explain the three main aspects of the isoprofit curve and how it is related to the market for risky/safe jobs. Illustrate this graphically.
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Consider two states that adopt different laws concerning labor unions.
The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour.
Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
020040060080010001200140016001614121086420WAGE (Dollars per hour)LABOR (Thousands of workers)Demand Supply
Graph Input Tool
Market for Labor
Wage
(Dollars per hour)
Labor Demanded
(Thousands of workers)
Labor Supplied
(Thousands of workers)
Enter $10.00 into the box labeled Wage on the previous graph.
Hint: Be sure to pay attention to the units used on the graph.
At the union wage,
union workers will be employed.…
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