1. Workers choose whether to work in a risky or in a safe job. Suppose there are 100 workers in the economy. Worker l's reservation price (for accepting the risky job over an equivalent safe job) is $1; worker 2's reservation price is $2, and so on. Because of technological reasons, there are only 8 risky jobs and they all need to be filled. What is the equilibrium compensating wage differential between safe and risky jobs? a) $8 b) $ 10 c) $100 d) $ 50 e) $3 2. Which of the following is true for the "backward-bending" range of the labour supply curve? a) The income effect is dominated by the substitution effect. b) The substitution effect is dominated by the income effect. c) There is no income effect. d) There is no substitution effect. e) The income and the substitution effects exactly offset each other.

1. Workers choose whether to work in a risky or in a safe job. Suppose there are 100 workers in the economy. Worker l's reservation price (for accepting the risky job over an equivalent safe job) is $1; worker 2's reservation price is $2, and so on. Because of technological reasons, there are only 8 risky jobs and they all need to be filled. What is the equilibrium compensating wage differential between safe and risky jobs? a) $8 b) $ 10 c) $100 d) $ 50 e) $3 2. Which of the following is true for the "backward-bending" range of the labour supply curve? a) The income effect is dominated by the substitution effect. b) The substitution effect is dominated by the income effect. c) There is no income effect. d) There is no substitution effect. e) The income and the substitution effects exactly offset each other.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Assuming that employers are required to pay a 20 percent overtime pay premium for all work beyond 8…

A: Earlier, the employer had 14 hour work days with no overtime. Now, he has to pay a 20% premium for…

Q: 8. Three worker-consumers selling their labour services in a labour market have individual supply…

A: Answer: Given, Individual market supply functions: N1=-30+4WN2=-5+1WN3=-10+0.5W The reservation wage…

Q: The figure depicts the efficiency wage equilibrium of a worker and a firm. According to this figure:…

A: Answer - Given in the question -

Q: 22 Suppose there is a negative compensating differential for risk (i.e., the riskier the job is,…

A: Answer - A Need to find- economic behavior or condition would this make sense The negative…

Q: It has been argued by some that immigration reduces job opportunities for native-born workers. Based…

A: In the labor market, the equilibrium wage rate is determined by the forces of demand and supply.…

Q: 2. Alternative explanations of wage disparities Suppose that a professor of labor economics finds…

A: The wage differential refers to the difference between the wage rate of two individuals doing the…

Q: 1. Suppose Maeby Bluth's wage-schooling locus is given by: Years of Schooling Earnings $18,500…

A: A rate of return is the net gain or loss on an investment over a specified time period expressed as…

Q: Assume we are investigating gender differences in labor market outcomes and we are analyzing…

A: Employee discrimination refers to unfair treatment of employees based on their personal…

Q: 2. Consider a labour market with 3 types of workers: great workers, normal workers, and perpetually…

A: Labor Market Equilibrium:A state in which the demand for labor (workers) by firms matches the supply…

Q: Refer to the diagram. Which of the following would be consistent with an decrease in racial…

A: The most consistent option with a decrease in racial prejudice against African Americans and a…

Q: How does a higher interest rate affect the elements of schooling choice? O The wage-schooling curve…

A: Economics refers to the study of scarcity and its implications for the use of resources, production…

Q: What is the maximum level of education the H-types will choose to get in any separating equilibrium?

A: This question is about a concept in economics called signaling.Signaling refers to the idea that one…

Q: Assume that the labour market for mechanics is competitive and that it is differentiated into two…

A: The labor market is the dwelling where the supply and the demand for jobs meet, with the labor or…

Q: Use the following to answer questions 76-80: Employee Benefits. The indifference curves in the graph…

A: The wage-benefit curve is a graphical representation of the relationship between wages and…

Q: Paragraph Font Consider an individual who initially works T-L. hours per week, where (T-L)>0. They…

A: The labor supply curve is the curve that shows the level of labor that would be supplied in the…

Q: Fringe benefits: a. As you might have suspected, employee nonwage (fringe) benefits make up a much…

A: Fringe benefits are forms of compensation provided by employers to employees in addition to their…

Q: A series of questions will rely on the following information describing Susan's decisions over…

A: The labor-leisure trade-off is faced by wage-earning individual who faces the trade-off between the…

Q: Downgrading refers to a situation where:

A: Occupational Downgrading is defined as a situation where an immigrants occupation is of a lower…

Q: Problem 4 Consider the leisure demand/labor supply model studied in class, and let the consumer have…

A: Given,

Q: Explain all options...pla

A: The employer behaves as if labor supplied by women incurs an extra cost on top of the wage…

Q: 1. The Nash bargaining solution between the employer and the worker satisfies the fol- lowing…

Q: Let D be the difference in marginal product between an experienced worker and a new worker (MPe −…

A: Answer d.Let D represent the marginal product difference between an experienced and a new worker…

Question

1. Workers choose whether to work in a risky or in a safe job. Suppose there are 100
workers in the economy. Worker l's reservation price (for accepting the risky job over
an equivalent safe job) is $1; worker 2's reservation price is $2, and so on. Because of
technological reasons, there are only 8 risky jobs and they all need to be filled. What is
the equilibrium compensating wage differential between safe and risky jobs?
a) $8
b) $ 10
c) $ 100
d) $ 50
e) $3
2. Which of the following is true for the "backward-bending" range of the labour supply
curve?
a) The income effect is dominated by the substitution effect.
b) The substitution effect is dominated by the income effect.
c) There is no income effect.
d) There is no substitution effect.
e) The income and the substitution effects exactly offset each other.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Diagrammatic representation

VIEW

Question 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Problem 2 Let's assume you’ve found the following labor demand and supply curves: Lp 30 – w Ls = 2w (a) Solve for the equilibrium wage and employment level. (b) Graph the demand and supply curves. (c) At this equilibrium, what is your welfare/gains from trade? (d) Now, assume a minimum wage has been implemented at $20. How will this impact your demand? Supply? (e) How many workers are displaced by this new policy? How much “extra" unemployment occurs with this new policy? Hint: Think about the reservation wage. (f) Graph the new labor demand and supply with this minimum wage. (g) At this equilibrium, what is your new welfare? Are you better off with this change? Explain.
In the 1970s Sweden adopted several new labour market policies affecting layoffs. Three were notable: (1) Plants that provided in-plant training instead of laying of workers in a recession received subsidies. (2) All workers had to be given at least one month's notice before being laid off, and the required time in he average plant was two to three months. (3) Laid-off workers had to be given first option on new jobs with the former employer.. What probable effects would these policies have on unemployment? government
Calculate MPL & MRP to determine how many employees the firm should hire. 1) Calculate MPL and the MRP of the business. We can assume that price = $3 and that the business must pay a wage to its employees of $20 per day. # of employees: Output MPL MRP 1 90 120 132 4 140 5 142 6 143 A*Based on these numbers, how many employees should this business use? Explain your answer. B*Show what the graph would like this for this firm if we have lines for wage and MRP. Show where they would cross and the optimal number of employees used also C*Explain what you think would happen if demand went up for the product and now price goes up to $4. LO
Fill in the below table, the wage equals AED 300 for each worker. In addition, each unit of output is sold at a price of AED 10. Number of workers Total Output Marginal Product of Labor (MPL) Value of Marginal Product of Labor VMPL = P x MPL Wage per Worker W Profit Margin (PM)PM=VMPL-Wage 0 0 - - - - 1 60 300 2 110 300 3 150 300 4 180 300 5 200 300 6 210 300
4. Winona has 80 hours to divide between leisure and labor. Her utility function is u(r,c) = f(r) + c, when r represents hours of leisure, c represents dollars of consumption, and fis strictly concave. Winona's wage is wo = $15/hr. initially, then it rises to wi = $20/hr. (i) Explain what happens to Winona's labor supply when the wage rises, and why. (ii) Explain how the answer to (i) would change if Winona were to win a lottery.
For any given job, how do the economy-wide labour market conditions affect aworker’s bargaining power? Explain which labour market variable you would look at toassess labour market conditions.
1
1. Why wages differ For each of the scenarios in the following table, indicate the most likely reason for the difference in earnings. Scenario Two automotive technicians have the same amount of schooling and work experience, but earn different wages. The first works the day shift for an auto manufacturer factory for an annual wage of $52,000 per year, and the second works the night shift for the same company for an annual wage of $63,000 per year. An economics consulting firm hires Carlos, a recent PhD graduate in economics, and pays him an annual wage of $80,000. It also hires Jake, a recent master's degree graduate in economics, and pays him an annual wage of $63,000. Major league hockey goalies earn more than minor league hockey goalies. Differences in Human Capital Compensating Differential O Differences in Ability O O Labor Unions O O O
5. Provide answers for the each of the following independent questions. a. Suppose Auto Fitters sells auto parts and car accessories from coast to coast. Last year's report suggested that a good salesperson can sell $1,000,000 a year worth of goods, while a poor one can sell only $100,000. Job applicants know if they are good or bad salespeople, but the hiring manager does not. The firm will offer job applicants a choice of a fixed salary of $25,000 or a commission of 20%. Assuming risk-neutral salespersons and the possibility of opportunistic behaviour, will this choice of contracts allow the firm to distinguish between good salespeople and bad ones before the hiring decision is made? b. Suppose Janet has the following demands for regular medical visits: Q = 12 – 0.2P when she is healthy, and Q = 40 – 0.4P when she is sick. Under the current insurance plan, Janet pays an average of $60 per visit, and she is sick 50% of the time. Janet considers an alternative insurance plan so she can…
A Moving to another question will save this response. tion 12 An example of compensating differential is workers in a dynamite mine earning higher than similarly skilled workers in another industry. O a. b. graduates from more reputed colleges earning a higher starting salary than graduates from less known schools. nurse anesthetists being paid less than anesthesiologists (who have a medical degree). C. Od among Hollywood stars, George Clooney making more money than William Fichtner Od. Moving to another question will save this response. F11 F12 F9 F10