Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 26, Problem 11CQ
To determine
Differences in the wage earnings of workers.
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Chapter 26 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Show that the competitive labor market compensates workers for the probability that they will be laid off.arrow_forward(Based on Chapter 2, Problem 1 of Benjamin et al., 2031) Amit has $2000 of annual non-labour income. He has 80 hours per week that he can allocate between labour and leisure, for 80 x 52 = 4160 hours per year. His current wage rate is $20 per hour and he chooses to work 2200 hours a year. (a) Draw a leisure - labour diagram, clearly indicating Amit's current labour supply decision. (Your diagram should be clearly labeled and include Amit's budget line and an indifferent curve showing his leisure and consumption of goods and services at his optimal choice. Use the figures provided to find the y-intercept and his consumption if he doesn't work.) (b) Amit's wage rate increases to $25 per hour. In response, he increases his labour supply to 2300 hours. If he were "compensated" accordingly, at this new wage rate he would be just indifferent to working 2200 hours at his original wage rate and working 2400 hours at the new wage. Illustrate Amit's new optimal choice. Use the information…arrow_forwardtrue or false? Non-monetary aspects to a job can explain why wages may differ given that two workers have the same talents, abilities, and investment in human capital.arrow_forward
- When would you see the greatest gain if there is a compensating differential built into your salary? The differential is for a negative risk that you care about more than most people do. The differential is for a large negative risk that you don't care about as much as most people do. The differential is for a positive job aspect that you don't care about as much as most people do. The differential is for a slightly positive job aspect that you care about more than most people do.arrow_forwardTRUE OR FALSE. When the wage rate increases by 20% & the quantity supplied of labor increases by 5%, then this type of labor is considered wage inelastic.arrow_forwardA carpenter quits his job at a furniture factory to open his own cabinetmaking business. In his first two years of operation, his sales average $100 000 per year and his operating costs for wood, workshop and tool rental, utilities, and miscellaneous expenses average $70 000 per year. Now his old job at the furniture factory is again available. What is the lowest wage at which he should decide to return to his old job? Why?arrow_forward
- What has happened to the share of American workers with steady jobs the 1970s? Who is responsible for the decline of “jobs”: does it reflect worker preferences or employer preferences? Why do you conclude this?arrow_forwardLucille receives an annual salary of $37,500 based on a 37.5-hour workweek. What are her gross earnings for a two-week pay period in which she works 9 hours of overtime at 1 1/2 times her regular rate of pay? (Assume there are exactly 52 weeks in a year. Round your answer to the nearest cent.) Gross earnings =arrow_forwardIn general, different jobs pay different wages. One overarching reason is that different jobs have different characteristics, with wages serving to compensate for those different characteristics. Consider two virtually identical individuals, employed in the same industry and working in the same region. One of the individuals works in Occupation A, while the other works in Occupation B. Assume that the individual working in Occupation A earns a higher wage than the individual working in Occupation B. Describe four differences between Occupations A and B that could each help explain the different wages paid to the two workers.arrow_forward
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