Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 18, Problem 9PA
Subpart (a):
To determine
The changes in labor market after the introduction of fringe benefits .
Subpart (b):
To determine
The changes in labor market after the introduction of fringe benefits.
Subpart (c):
To determine
The changes in labor market after the introduction of fringe benefits.
Subpart (d):
To determine
The changes in labor market after the introduction of fringe benefits.
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V4. Suppose that you have the following information about the market for employees in your buisness: Supply: W=20+N
Demand: W=40-N
a. Suppose that the union negotiates a team size of only 5 employees. Draw this graphically and calculate the new equilibrium wage number of employees.
b. Draw this graphically and calculate the equilibrium wage and number of employees hired.
Draw a wage setting curve, with the wage (S/hr) on the y-axis and the employment level on the x-axis. a. Suppose the market wage is $35/hr. Label this market wage on your graph of your wage setting
curve, W1 = $35/hr. Label the corresponding level of market employment, E1. b. Draw a second graph of a firm with pricing power that uses labor in their production process. Assume their marginal cost of
production is equal to the labor rate of $35/hr. Draw this firms demand curve, marginal revenue curve and marginal cost curve. (Any downward sloping demand curve and marginal revenue curve will do, as
long as the y-intercept is above marginal cost (e.g., P = 100-10Q, MR = 100-20Q).) Label the firms profit maximizing level of price and quantity. c. Now, suppose a global pandemic reduces aggregate
demand. How does this affect the demand curve the firm faces? How does this affect the production quantity, and labor demanded? Show this on your firm profit maximization graph. d. Assume employees…
Consider the market for labor where both firms and workers are price takers. Output is produced using capital and labor.The marginal product of labor can be described by: 200 – 4L, where L is the number of workers hired. The price of the good produced is 5 per unit.
a. Illustrate the demand for labor. Be sure to note the specific value of the vertical intercept.
b. Suppose that the competitive firm must pay 100 for each worker. Determine the number of workers hired. (Determine the total income to capital. Show your work for both parts.
c. Suppose that the price of the good rises but that the wage remains the same. Illustrate how the optimal choice of labor would change. No need to do the explicit calculation; just show the outcome and briefly explain.
Chapter 18 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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