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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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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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.
2
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
- What determines the demand for labor for a firm operation in a perfectly competitive out market?arrow_forward46. How much labor will this firm employ and at what wage? (a) 20 units at $100 (b) 20 units at $50 (c) 35 units at $90 (d) 25 units at $65arrow_forward4. 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_forward
- M11arrow_forward19. (Use this information to answer qustion 19 - 23) Suppose there is one firm solving the following profit maximization problem. Note that the output price is normalized as 1. max AL¹-a WL - {L} where A = 2 and a = 0.6. How much is the aggregate labor demand when the wage is 1? (a) 0.242 (b) 0.435 (c) 0.689 (d) 0.923arrow_forwardWould 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_forward
- Why 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_forwardPRICE (Dollars per ton) 80 72 64 56 48 40 32 24 16 8 0 0 Demand 120 240 360 480 600 720 840 960 1080 1200 QUANTITY (Thousands of tons) Supply (20 firms) Supply (40 firms) Supply (60 firms) True False (?) If there were 60 firms in this market, the short-run equilibrium price of steel would be $ per ton. At that price, firms in this industry would Therefore, in the long run, firms would the steel market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be $ per ton. From the graph, you can see that this means there will be firms operating in the steel industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit.arrow_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_forwardeconomics question. answer D, Earrow_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_forward
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