ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 12, Problem 11P
To determine
The reasons unions are more effective at increasing wage rates in oligopolistic industries than competitive industries.
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8
2. Excess supply with union wages
Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through
collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it
succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour.
The following graph shows the labor demand of an individual firm.
On the following graph, show what happens at the firm level as a result of the union negotiations.
3
0
12
18
Demand
Supply
20
25
30
QUANTITY OF LABOR
Now consider the effects of the wage change on the entire industry.
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Demand
--
Supply
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.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
°
18
Graph Input…
3. [TRUE / FALSE] pls explain
When a monopsonist is operating in the long-run, then at theprofit-maximizing output average cost can be increasing.
Chapter 12 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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Similar questions
- 4. Inclusive, or industrial, unions - Negotiating a higher industry wage Consider the housing construction industry. Assume that the industry is perfectly competitive in both input and output markets. Suppose that, through collective bargaining, a labor union negotiates an industry-wide wage for various kinds of labor (electricians, plumbers, and so on). In particular, it succeeds in negotiating a wage increase for carpenters from $9 to $12 per hour. The following graph shows the labor demand of an individual firm. On the following graph, show what happens at the firm level as a result of the union negotiations. 18 15 Demand 12 Supply Supply Demand 3 10 15 20 25 30 QUANTITY OF LABOR ---- --- Co WAGE RATEarrow_forward4. In a small isolated town in the Rocky Mountains the only firm that hires workers is a logging company. The firm's demand for labor and the town's supply of labor are as follows: Wage Quantity Supplicd Quantity Demanded $1 20 220 40 200 3 60 180 4 80 160 5 100 140 120 120 7 140 100 8. 160 80 180 60 10 200 40 a. How much labor will this profit maximizing monopsonist hire? (Assume that labor can only be hired in blocks of 20 units) b. What wage will the monopsonist pay to its workers?arrow_forwardM11arrow_forward
- 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.arrow_forwardWhy did labor have little say in old firm operations? Too much capital O Too much demand O Too much supply O Too much regulationarrow_forward6) Refer to Table below. If the price of output is $20 per unit, the marginal revenue product of the fifth unit of labor is Number of workers 2 3 4 5678 6 Units of output 100 160 210 250 280 300 310arrow_forward
- Which of the following is a method used by unions to increase the demand for their members' labor? O A. Decrease the marginal product of union members. O B. Oppose minimum wage laws. OC. Oppose immigration restrictions. O D. Support import restrictions. O E. Increase imported goods and servicesarrow_forward4. Suppose the minimum wage is raised from $7.25 per hour to $15.00 per hour (as has been proposed by activists and politicians across the USA over the last couple of years). In different competitive industries that rely on unskilled labor (where a substantial portion of the workforce is paid the minimum wage) what about these firms or markets would you most want to know to be able to predict the effect on unskilled employment in each industry in the long run? Use any graphs you need to in your explanation. (hint: there are two different elasticities that likely play important roles).arrow_forwardE2arrow_forward
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