Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 12, Problem 4P
To determine
Explain the reason for a permanent wage difference between the market for labour or within the same labour market.
Concept Introduction:
Market for labour: This is a place where employers and employees interact with each other. This refers to the supply and
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Suppose there are two goods, pizza and beverage. Suppose alp=5289, atp=911, alb=2508, atb=2172, Pp=11400, and Pb=12500. What is the equilibrium wage?
6. Plotting the supply of labor
In Providence, 120 people are willing to spend an hour working as pizza makers for an hourly wage of $20. For each additional $5 that the wage
increases above $20, an additional 30 people are willing to spend an hour working.
For hourly wages of $20, $25, $30, $35, and $40, plot the daily labor supply curve for pizza makers on the following graph.
WAGE (Dollars per hour)
50
45
40
35
30
25
20
15
10
5
0
0
+
30
60
90 120 150 180 210
LABOR (Number of workers)
240 270 300
Supply
What is one explanation for why this labor supply curve is upward sloping?
The opportunity cost of leisure increases as wages increase.
O Unemployment benefits are steadily declining.
Wages have to increase to accommodate union pressure.
O Firms are willing to hire fewer pizza makers at a higher wage.
22
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- Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?arrow_forwardName some factors that can cause- a shift in the supply curve in labor markets.arrow_forwardWhat is die price commonly called in the labor market?arrow_forward
- Predict how each of the following events will raise or lower the equilibrium wage and quantity of oil worker in Texas. In each case, sketch a demand and supply diagram to illustrate your answer. The price of oil rises. New all-drilling equipment is invented that is cheap and requires few workers to run. Several major companies that do not drill oil open factories in Texas, offering many well-paid jobs outside the oil industry. Government imposes costly new regulations to make oil-drilling a safer job.arrow_forwardName some factors that can cause a shift in the demand curve in labor markets.arrow_forwardA 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 Value of the Marginal Product Labor Labor Output (Units of output) of Labor (Number of workers) (Units of output) (Dollars) 20 1 20 19 2 39 18 3 57 15 72 12 5 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 worker should be plotted with a horizontal coordinate of 0.5, the value halfway…arrow_forward
- 12. The figure shows Edwyn’s labor supply curve. Consider a wage increase from $5 to $6. For Edwyn, does the price effect or income effect dominate his labor supply decision? Consider a wage increase from $7 to $8. For Edwyn, does the price effect or income effect dominate his labor supply decision?arrow_forwardFigure 18b This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D1 and D2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. 0 S D₁ What is measured along the vertical axis on the graph? O a. the wage paid to automobile workers O b. time spent by workers producing automobiles O c. the quantity of automobiles produced O d. the price of automobiles Larrow_forward2. 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. Supplyarrow_forward
- Qus 11arrow_forward9. Plotting the supply of labor In Chicago, 40 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 20 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 (Dollars per hour) 50 46 40 35 30 25 20 15 pia Homework 10 5 -0- Supplyarrow_forwardValue of Marginal Product Labor 123 1 2 4 5 6 Marginal Product of Labor 10 8 7 5 3 1 Price of Product $$$$$$ $4 $4 $4 $4 $4 $4 VMPL Calculate the VMP, at each level of labor If the Firm operates in a Perfectly Competitive Labor Market where the going market wage is $12, what is the profit maximizing level of employment?arrow_forward
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