2. Real wages, nominal wages, and unexpected changes in the price level Cate currently earns a wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the mumber of hours she works. Suppose the price of orange juice is $2.40 per gallon; in this case, Kate's, wage, in terms of the amount of range juice she can buy with her paycheck, i gallons of orange juice per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on wage with those expectations in mind. If the price level turns out to be lower than expected, a worker's than both the worker and employer expected when they agreed to the wage. wage is Cate and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 er hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 2%, not 4%. For xample, suppose the price of orange juice rose from $2.40 per gallon to $2.45 per gallon. This means that between 2012 and 2013, Kate's nominal wage by %, and her real wage by approximately

2. Real wages, nominal wages, and unexpected changes in the price level Cate currently earns a wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the mumber of hours she works. Suppose the price of orange juice is $2.40 per gallon; in this case, Kate's, wage, in terms of the amount of range juice she can buy with her paycheck, i gallons of orange juice per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on wage with those expectations in mind. If the price level turns out to be lower than expected, a worker's than both the worker and employer expected when they agreed to the wage. wage is Cate and her employer both expected inflation to be 4% between 2012 and 2013, so they agreed, in a two-year contract, that she would earn $12.00 er hour in 2012 and $12.48 per hour in 2013. However, suppose inflation between 2012 and 2013 actually turned out to be 2%, not 4%. For xample, suppose the price of orange juice rose from $2.40 per gallon to $2.45 per gallon. This means that between 2012 and 2013, Kate's nominal wage by %, and her real wage by approximately

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Giving each firm that hires one or more welfare workers a payment of $1.000 per year, irrespective of the number it hires, is likely to be O A. successful because firms hire workers such that the marginal revenue product of labor equals the marginal cost of labor, and this approach reduces the marginal cost of labor by $1,000 per worker, increasing employment O B. successful at increasing employment by one additional worker because firms hire workers such that the marginal revenue product of labor equals the marginal cost of labor, and this approach reduces the marginal cost of labor by $1,000 for the first worker hired. O C. unsuccessful at increasing employment because firms hire workers such that the marginal revenue product of labor equals the marginal cost of labor, and this approach does not affect the marginal cost of labor. O D. successful because firms hire workers such that the marginal revenue product of labor equals the marginal cost of labor, and this approach reduces the…
1. Zoe is trying to decide how to divide her time between her job as a wedding photographer, which pays $27 per hour for as many hours as she chooses to work, and as a fossil collector, in which her pay depends on both the price of fossils and the number of fossils she finds. Earnings aside. Zoe is indifferent between the two tasks, and the number of fossils she can find depends on the number of hours a day she searches, as shown in the table below: (LOI) Hours per day Total fossils per day 1 5 2 3 9 12 14 15 a. Using the information above, compute the lowest price that Zoe would accept per fossil in order to justify her spending more time collecting fossils and less time working as a wedding photographer. b. Plot these points in a graph with price on the vertical axis and quantity per day on the horizontal. What is this curve called? 4
2. Graphing demand for labor and computing the optimal quantity of labor demanded A company operates in a competitive market, selling each unit of output for a price of $20 and paying the market wage of $270 per day for each worker it hires. In the following table, complete the column for the value of the marginal product of labor (VMPL) at each quantity of workers. Marginal Product of Labor (Units of output) Value of the Marginal Product of Labor Labor Output (Units of output) (Dollars) (Number of workers) 0. 20 20 19 39 18 3. 57 15 72 12 84 On the following graph, use the blue points (circle symbol) to plot the firm's labor demand curve. Then, use the orange line (square symbols) to show the wage rate. (Note: If you cannot place the wage rate at the level you want, move the two end points individually.) Hint: Remember to plot each point halfway between the two integers. For example, when the number of workers increases from 0 to 1, the value of the marginal product for the first…
12. Economics: Labor Economics Thank you for your help and support Academic Agent!
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Please no written by hand Use the concepts of gross substitutes, gross completements, and pure complements to assess the likely impact of the rapid decline in the price of computers and related office equipment on the labor demand for secretaries.
Before the sick pay policy was instituted, teachers received no pay for days that they did not work. Consider a teacher who, prior to the introduction of sick pay, took 50 days of sick leave. According to labor supply theory, how will introduction of the sick pay policy described above change the amount of sick leave that this teacher takes? #1 Sick leave will increase because of substitution and income effects that reinforce each other. O Sick leave will increase because of a substitution effect. O Sick leave will not change. O Sick leave will increase because of an income effect. O The change in sick leave is indeterminate because of conflicting substitution and income effects.
Quiz na 16 Mary 8. 11 4 10 5 Quantity (thousands of hours per month) Fin In the above figure, if the government imposed a minimum wage of $16 per hour in this labor market, the increase in the hourly wage for those who are able to keep their jobs is Oa. $8 per hour. O b. $12 per hour. O C. $4 per hour. O d. $16 per hour. CLEAR MY CHOICE Wage rate (dollars per hour) 1,
Assuming a worker can ear a maximum of $180 in total earrings number of working hours avallable are 16 hours and there ara 2 hours work, then the worker's wage rate is equal to O A $18.00 O B. $11.25 O C. Can't be determined given the information provided O D. $12.86
2. Plotting the supply of labor In Detroit, 120 people are willing to work an hour as cashiers if the wage is $20 per hour. For each additional $5 that the wage rises above $20, an additional 30 people are willing to work an hour. For wages of $20, $25, $30, $35, and $40 per hour, plot the daily labor supply curve for cashiers on the following graph. WAGE RATE (Dollars per hour) 50 45 40 35 30 25 20 15 10 5 0 D 30 60 90 120 150 180 210 240 270 QUANTITY OF LABOR (Number of workers) 300 What is one explanation for why this labor supply curve is upward sloping? O Wages have to increase to accommodate union pressure. Firms are willing to hire more cashiers at a lower wage. O The opportunity cost of leisure increases as wages increase. O Unemployment benefits are steadily declining. Supply
QUESTION 12 The backward-bending supply of labour curve is based on consideration of income and substitution effects. Which of these statements explains why the labour supply curve slopes upwards when wage rates are relatively low? O a. The income effect outweighs the substitution effect O b. The individual feels able to give up consumption in order to enjoy more leisure O c. Wage increases increase the opportunity cost of leisure O d. The income and substitution effects work in the same direction