b. The programmers in this town are going to work at one of these two places for sure: Their labor supply is vertical, or in other words, perfectly inelastic, with supply equal to 100. So, what will the equilibrium wage be? Just as in Figure 18.1, the numbers may not work out exactly, so use your judgment to come up with a good answer. Equilibrium wage: $ ___ One way to think about wages for different jobs is to see it as another application of the law of one price. We came across thislaw when we discussed speculation in Chapter 7, and it came up again when we discussed international trade in Chapter 9. Thebasic idea is that the supply of workers will keep adjusting until jobs that need the same kinds of workers earn the same wage. Ifsimilar workers earned different wages, then the workers in the low-paid jobs would reduce their labor supply, and the workers inthe high-paid jobs would face more competition from those low-paid workers.Let's look at 100 computer programmers who are trying to decide whether to work for one of two companies: Robotron orKorrexia. To keep things simple, assume that both companies are equally fun to work for, so you don't need to worry aboutcompensating differentials here. The marginal product of labor (MPL) per additional hour of work for each firm is in the table.Number of ProgrammersRobotron'sKorrexia'sper FirmMPL ($)MPL ($)10100552075403060304055255040206030107025580209010100 The labor demand curve you constructed in part a is given in the accompanying diagram and also in the table.Labor marketWageNumber ofWages (w)($)Programmers$10510010010957520908560308055507570407065603090552511050452013040101503530517025Demand20151050 20406080100120140160180Quantity of labor (L)

The confluence of labor supply and demand determines the equilibrium market wage rate. Employees are…

b. The programmers in this town are going to work at one of these two places for sure: Their labor supply is vertical, or in other words, perfectly inelastic, with supply equal to 100. So, what will the equilibrium wage be? Just as in Figure 18.1, the numbers may not work out exactly, so use your judgment to come up with a good answer. Equilibrium wage: $ ___

b. The programmers in this town are going to work at one of these two places for sure: Their labor supply is vertical, or in other words, perfectly inelastic, with supply equal to 100. So, what will the equilibrium wage be? Just as in Figure 18.1, the numbers may not work out exactly, so use your judgment to come up with a good answer. Equilibrium wage: $ ___

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter27: Wages, Unions, And Labor

Section: Chapter Questions

Problem 9QP

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Consider two provinces that adopt different laws concerning labour unions. The following graph shows the labour market in a province in the West. Initially, the market-clearing wage is $5 per hour. Suppose that the legislature in this western province passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $7 per hour. Use the black point (plus symbol) to show how many union workers will be employed at the $7 wage. (Hint: Be sure to place the point on the appropriate curve.)
Think about the labor market for orthodontists in the United States. Suppose a union is organized, and it successfully increases job qualification standards, meaning orthodontists have to acquire additional skills to meet the new standard. Assume the value of the marginal product does not change. All else equal, which labor market curve is impacted by the organization of a union and what happens to orthodontists' wages : and employment? labor demand shifts left; wage decreases and employment decreases O labor demand shifts right; wage increases and employment increases O labor supply shifts left; wage decreases and employment increases O labor supply shifts right; wage increases and employment decreases O labor supply shifts left; wage increases and employment decreases
Consider two provinces that adopt different laws concerning labour unions. The following graph shows the labour market in a province in the West. Initially, the market-clearing wage is $10 per hour. Suppose that the legislature in this western province passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $16 per hour. Use the black point (plus symbol) to show how many union workers will be employed at the $16 wage. (Hint: Be sure to place the point on the appropriate curve.) Labour Market in the West 20 18 Union Negotiations 16 14 Supply 12 10 2 Demand ㅇ 4 6 8 10 12 14 18 18 20 LABOUR (Millions of workers) The following graph shows the labour market in a province in Eastern Canada. The legislature in this province passes strong right-to-work laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the two…
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:____
Table 14.12 shows the quantity demanded and supplied in the labor market for driving city buses in the town ofUnionville, where all the bus drivers belong to a union. a. What would the equilibrium wage and quantity be in this market if no union existed?b. Assume that the union has enough negotiating power to raise the wage to $4 per hour higher than it wouldotherwise be. Is there now excess demand or excess supply of labor?
What are the welfare effects of a binding minimum wage? Use a graphical approach to show what happens if all workers are identical. Then describe in writing what is likely to happen to workers who differ by experience, education. age, gender, and race.
Each of two firms has one job opening. Suppose that (for reasons not discussed here but relating to the value of filling each opening) the firms offer different wages: firm i = 1,2 offers the wage wi. Imagine two workers, each of whom can apply to only one firm. The workers simultaneously decide whether to apply to firm 1 or to firm 2. If only one worker applies to a given firm, that worker gets the job; if both workers apply to one firm, the firm hires one worker at random (probability 0.5 for hiring worker 1 and probability 0.5 of hiring worker 2) and the other worker is unemployed (which has a payoff of zero). Suppose workers are risk neutral i.e., u(w) = w. Solve for the set of Nash equilibria of the workers normal-form game when 0.5w1 > w2. At equilibrium would a worker secure a job? Explain
The table below shows the quantity demanded and supplied in the labor market for economics professors at I'mAStateUniversity, where all the professors belong to a union. All of the economics professors could also work as economic consultants, but the market for economic consultants is not unionized. Annual Salary Quantity of workers demanded Quantity of workers supplied $50,000 95 20 $60,000 80 30 $70,000 65 40 $80,000 50 50 $90,000 35 60 $100,000 20 70 If the union negotiates an annual salary increase for economics professors that is $20,000 higher than the market wage rate for economic consultants, then the market wage rate for the consulting positions will _____________________ and the quantity of economic consultants employed will_____________________. Question 3 options: rise, rise rise, fall fall, rise fall, fall
Immigration is a multi-faceted phenomenon, with the potential for both large-scale and industry- specific effects. Consider the following two effects of immigration that could occur in a specific market: • More consumers are now in the market. • The price of labor goes down due to increased competition in the labor market. Focusing only on these two effects, what would we expect to happen to prices and quantities in this market? Note labor is used as an input in all industries. a. Prices will decrease, but quantities could increase, decrease, or stay the same. b. Prices will increase, but quantities could increase, decrease, or stay the same. c. Quantities will decrease, but prices could increase, decrease, or stay the same. d. Quantities will increase, but prices could increase, decrease, or stay the same.
Figure demonstrates some of the trade-offs involved when deciding to join a union.a. Provide a graph that shows how the presence of union dues affects the decision to join a union. (Assume all workers pay a flat rate for dues.) Show on your graph how the presence of union dues may lead the worker to be less inclined to join the uni on.b. Suppose in addition to higher wages the union negotiates a 10 percent employer contribution to a defined contribution pension plan. Provide a graph that incorporates this retirement benefit into the decision of whether to join a union. Show on your graph how additional fringe benefits such as a retirement plan may cause the worker to be more inclined to join the union.
Union A wants to represent workers in a firm that would hire 20,000 workers if the wage rate is $12 and would hire 10,000 workers if the wage rate is $15. Union B wants to represent workers in a firm that would hire 30,000 workers if the wage rate is $20 and would hire 33,000 workers if the wage rate is $15. Which union is likely to or ganize?
Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired by those employers? Explain briefly.