Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 19, Problem 8PA
To determine
Discrimination and wage differential.
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Explain your answer comprehensively about the question stated below:
Suppose Congress were to mandate that all employers had to offer their employees a life insurance policy worth at least $50,000. Use Economic Theory and concepts, both positively and normatively, to analyze the effects of this mandate on employee well-being.
What effect does this mandate have on the demand for labor? Use also curve to demonstrate the answer.
Please answer
11. Problems and Applications Q13
Suppose that Parliament passes a law requiring employers to provide employees some benefit (such as dental care) that raises the cost of an
employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation.
On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labour.
Wage (Dollars per hour)
20
18
16
14
12
10
8
4
2
0
Demand
+
0 1
+
2
3 4 5 6 7
Quantity of Labour
8
Supply
9 10
New Demand
New Supply
Equilibrium Before Law
Suppose employees place a value on this benefit exactly equal to its cost.
Equilibrium After Law
(?)
Chapter 19 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- The market for plumbers in Boston is currently in equilibrium. Labor supply is given by Ls = 3 x W and labor demand is given by Ld = 45 - W (where L = quantity of workers, Ls quantity of workers supplied, Ld = quantity of workers demanded, and W = wage). The plumbers have just unionized and have negotiated a wage of $25 for all plumbers in Boston. How many plumbers do you expect to be unemployed as the result of this change? Please round your answer to the nearest integer. %3D %3D %3Darrow_forwardSome economists argue that unions raise prices and cause unemployment by bargaining for higher wages than would otherwise be the case. Other economists argue that this is not true. Who is right and why? Solve within one hourarrow_forwardConsider a third pricing scheme that the union in Solved Problem 12.2 might use. It sets a wage, , and lets the firms hire as many workers as they want (that is, the union does not set a minimum number of hours), but requires a lump-sum contribution to each worker’s retirement fund. What is such a pricing scheme called? Can the union achieve the same outcome as it would if it perfectly price discriminated? (Hint: It could set the wage where the supply curve hits the demand curve.) Does your answer depend on whether the union workers are identical? Solved Problem 12.2 Competitive firms are the customers of a union, which is the monopoly supplier of labor services. Show the union’s “producer surplus” if it perfectly price discriminates. Then suppose that the union makes the firms a take-it-or-leave-it offer: They must guarantee to hire a minimum of hours of work at a wage of , or they can hire no one. Show that by setting appropriately, the union can…arrow_forward
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