Principles of Microeconomics, California Edition
2nd Edition
ISBN: 9780393622102
Author: Dirk Mateer, Lee Coppock
Publisher: NORTON
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Chapter 3, Problem 1SP
To determine
Impact of marriage on demand and supply if successful.
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11. The backward-sloping labor supply curve
Frances has 80 hours per week to devote to working or to leisure. She is paid an hourly wage and can work at her job as many hours a week as she
likes.
The following graph illustrates Frances's weekly income-leisure tradeoff. The three lines labeled BC,, BC2, and BC3 illustrate her time allocation
budget at three different wages; points A, B, and C show her optimal time allocation choices along each of these constraints.
BC3
1200
BC2
800
C
BC,
400
A
35 40 45
LEISURE (Hours)
INCOME (Dollars)
ו ם
Use the graph to answer the question that follows.
Based on the graph, which of the following factors can cause the market labor demand curve in the automotive industry to shift from D1 to D2?
A-A decrease in the human capital of automotive workers
B-An increase in the cost of robotics used as a labor substitute
C-An increase in immigration from foreign countries
D-An increase in the wage rate of automotive workers
E-A decrease in the marginal revenue product of labor
The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City.
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.
WAGE (Dollars per hour)
20
18
16
14
2
0
0
Supply
Demand
50 100 150 200 250 300 350 400 450 500
LABOR (Thousands of workers)
Graph Input Tool
Market for Labor in the Fast Food Industry
Wage
(Dollars per hour)
Labor Demanded
(Thousands of
workers)
6
500
Labor Supplied
(Thousands of
workers)
0
Chapter 3 Solutions
Principles of Microeconomics, California Edition
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- Consider a production function Y = KªL1-«. a) What is the marginal product of capital? Write down the formula and show your working. b) Write down the profit maximization problem for the firm.arrow_forwardConsider the labor market for the fast-food industry, which consists mainly of high school and college students. Assume that all fast-food restaurants are profit maximizing. The following calculator shows the market demand curve (blue curve) and market supply curve (orange curve) for student workers, who are responsible for making tacos. At any time in this problem, you can click the Reset to Initial Values button to return the elements in the calculator to their original positions. You will not be graded on any changes to the calculator; it's just here to help you answer the following questions. Tool tip: You can directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. WAGE RATE IX 0 10 20 30 40 50 60 70 80 90 100 QUANTITY OF LABOR (Thousands of workers) 14 Graph Input Tool LABOR MARKET CALCULATOR Wage rate Labor demanded (Thousands of workers) Price of a taco (Dollars) When the price…arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. 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. WAGE (Dollars per hour) 20 18 16 14 12 2 0 0 Supply Demand 90 180 270 360 450 540 630 720 810 900 LABOR (Thousands of workers) In this market, the equilibrium hourly wage is $ Graph Input Tool Market for Labor in the Fast Food Industry Wage (Dollars per hour) Labor Demanded (Thousands of workers) 6 900 and the equilibrium quantity of labor is Labor Supplied (Thousands of workers) ? 378 thousand workers.arrow_forward
- Ginny currently earns a (a. nominal; b. real) wage of $12.00 per hour; in other words, the amount of her paycheck each week is $12.00 per hour times the number of hours she works. Suppose the price of sparkling water is $2.00 per gallon; in this case, Ginny's (a. real; b. nominal) wage, in terms of the amount of sparkling water she can buy with her paycheck, is (blank) gallons of sparkling water per hour. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on a (a. nominal; b. real) wage with those expectations in mind. If the price level turns out to be higher than expected, a worker's (a. real; b. nominal) wage is (a. lower; b. higher) than both the worker and employer expected when they agreed to the wage. Ginny and her employer both expected inflation to be 3% between 2012 and 2013, so they agreed, in a two-year contract, that she…arrow_forwardWages, Workers, and Management - End of Chapter Problem As of 2018, the federal minimum wage in the United States was $7.25 per hour. There have been proposals to increase the federal minimum wage to $15.00 per hour. Assume the labor market for minimum wage workers is in equilibrium at the current minimum wage of $7.25 and that Congress passes a law to increases the minimum wage to $15.00 per hour. Place the points on the graph to illustrate the price floor created by the minimum wage law. Wage ($ per hour) 120 19 18 7 16 54 13 12 17 15 14 11 10 9 8 7 6 5 4 3 2 1 0 0 Minimum wage ●Labor supply X Labor demand 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Quantity of workers (hundred thousand) As a result of the increase in minimum wage to $15 an hour, the quantity of labor supplied will be quantity of labor demanded, and there will be workers unemployed. thearrow_forwardThis 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. S Refer to Figure above. What is measured along the vertical axis on the graph? Select one: a. time spent by workers producing automobiles b. the price of automobiles c. the wage paid to automobile workers d. the quantity of automobiles producedarrow_forward
- Q1). Suppose the labor market is initially at its equilibrium, i.e., the labor supplied equals the labor demanded. Now suppose IBM develops a new computer chip that makes computer incredibly faster. Explain and show graphically how the arrival of a new, more productive technology affects the labor market. Draw the full graph and provide a detailed explanation of the effect. Label the axes/curves, explain why either the aggregate labor demand curve or the aggregate labor supply curve shifts and describe the economic mechanism that moves the economy from the old to the new equilibrium.arrow_forwardComplete the following table by selecting the term that matches each definition on the left. Value of Market Market the Labor Marginal Product of Labor Marginal Product Demand Supply Curve Definition Curve of Labor Labor The increase in the amount of output from an additional unit of labor The additional revenue the firm receives from selling the output produced from an additional unit of labor The graphical representation of the relationship between the wage rate and the quantity of labor workers are willing to provide in a market The graphical representation of the relationship between the wage rate and the quantity of labor firms are willing to hire in a market Which of the following events may increase the marginal product of labor? Check all that apply. nA decrease in the wage rate A technological improvement that is complementary for this type of labor n Good weather causes an increase in supply and a fall in price for one of the inputs used to make the good nA technological…arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. 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. Graph Input Tool Market for Labor in the Fast Food Industry 20 I Wage (Dollars per hour) 18 6 Supply 16 Labor Demanded Labor Supplied (Thousands of workers) 900 378 (Thousands of workers) 14 Demand 2 90 180 270 380 450 540 630 720 810 900 LABOR (Thousands of workers) WAGE (Dollars per hour)arrow_forward
- Assume that the information technology and consulting industries employ people with similar skills. Suppose a decrease in the demand for consultants leads to a fall in their wages, while the demand for computer analysts remains the same. The following graph shows the labor market for computer analysts in the United States. Show the effect of the fall in demand for consultants on the U.S. labor market for computer analysts by shifting the labor demand curve, the labor supply curve, or both. WAGE LABOR Supply Demand Demand Supply ?arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. 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. Graph Input Tool Market for Labor in the Fast Food Industry 20 18 Supply I Wage (Dollars per hour) 8. 16 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) 480 320 14 12 10 8 Demand 0. 80 160 240 320 400 480 560 640 720 800 LABOR (Thousands of workers) In this market, the equilibrium hourly wage is $ and the equilibrium quantity of labor is thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a WAGE (Dollars per hour) 6,arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. 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. Graph Input Tool (? Market for Labor in the Fast Food Industry 20 I Wage (Dollars per hour) 18 Supply 18 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) 900 378 14 12 10 Demand 2 90 180 270 380 450 540 630 720 810 900 LABOR (Thousands of workers) In this market, the eqilibrium hourly wage is S and the equilibrium quantity of labor is thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a WAGE (Dollars per hour)arrow_forward
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