Econ 212 HW chapter 9
Anthony owns a landscaping business that has 4 employees. His company is able to earn revenue of $600 per day. He knows that if he hires another worker, he would have to pay that worker $50 per day and the company would earn revenue of $680 per day if the new worker is hired. Determine the value of the marginal product of labor of the employee that Anthony is considering hiring.
$80
Which of the following is one of the factors that can increase wage rigidity in the labormarket?
- worker resistance to a decline in wages - collective bargaining - increased union membership
which of the following is not one of the factors that can increase wage rigidity in the labor market
an increase in the time needed to search for available jobs
Suppose that a deep and prolonged recession induces some job seekers to discontinue their job search efforts due to the belief that no jobs are available for them. These individuals are known as blank workers, and an increase in their numbers, all else constant, will cause unemployment rates computed above to blank
discouraged; decrease (unemployed means you are actively searching for a job)
which of the following would be classified as unemployed?
someone who is not working and looked for work two weeks ago
how to calculate unemployment rate
unemployed/ labor force (unemployed+employed) * 100
the impact of the minimum wage on the labor market as a whole is blank, since blank of workers earn the minimum wage rate
modest; around 1 percent
In general, we find that unemployment rates are lower among ____________ workers since the opportunity cost of their time spent not working is ____________.
more educated; higher
Anthony owns a landscaping business that has 4 employees. His company is able to earn revenue of $600 per day. He knows that if he hires another worker, he would have to pay that worker $50 per day and the company would earn revenue of $680 per day if the new worker is hired. Determine the value of the marginal product of labor of the employee that Anthony is considering hiring.
$80
the civilian unemployment rate including persons who are underemployed (part-time for economic reasons) is ____ percent
((5,952+2,880)/164,409)*100 = 5.37
the civilian unemployment rate including persons who are underemployed (part-time for economic reasons) is
((6270+2707)/163991)*100 = 5.47%
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. If the wage paid to workers in Die Cast's plant is $35/hour, it should employ ____ workers
(120-90)*$1.5 = 45 so the 3rd worker get the value of the 3 worker output minus the second worker output and multiply it by $1.50
the civilian unemployment rate is ____ percent
(5,952/164,409)*100 = 3.62
if the labor force participation rate is 80 percent, the number of potential workers is ____ million
162/.85 = 194.12
If the labor force is 165 million and the unemployment rate is 6.0 percent, the number of people considered employed is ____ million
165*(1-.06) = 155.10
voluntarily unemployed
are willing to work, but only for a wage above the market-clearing wage
the value of the marginal product of labor is the
the value of the marginal product of labor can be seen as the revenue that an additional worker brings in for the firm market value of a worker's additional output for a firm
Using the graph, we can see that if the minimum wage were set at $4 per hour, then ____________.
there would be no structural unemployment due to wage rigidity, since the minimum wage is non-binding at $4 per hour
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. the marginal product of labor for the sixth hour of labor is
(155-150) = 5 units I got the 5th output and subtracted it by the sixth
unemployment rate for women
(2950/76425)*100 = 3.9% (# of women unemployed/# of women in the labor force)*100
unemployment for men
(3320/87567)*100 = 3.8% (#number of men unemployed/# of men in the labor force)*100
the civilian unemployment rate is
(6270/163991)*100 = 3.82%
The following table lists the employment statistics of Australia for the years 2003-2007. Complete the table by filling out the missing values. Labor force participation rate.
(labor force/potential workers) *100 (10,098,342/13,360,342) *100 = 75.6
Based on your answer to the previous part, which of the following statements are likely to be true of structural unemployment?
- an increase in structural unemployment due to the reduction in the minimum wage is a supply-side effect - an increase in structural unemployment due to the reluctance of employers to hire unskilled workers is a demand-side effect
which of the following is an example of what economists refer to as job search?
- an individual that engages in the job hunt by determining who is hiring and how much they pay - people that engage in the job hunt by sending out resumes - a person who applies for a high-paying job but does not qualify, so she begins searching for an appropriate position
which of the following does cause the labor supply curve to shift
- changes in the level of immigration - changing opportunity cost of time - changing social norms and their impact on people's willingness to take a job
which of the following factors do cause a shift in the labor demand curve
- changing input prices - changing technology - changes in output prices
The graph on the right shows the demand for and supply of labor in a market with an equilibrium wage rate of $7 per hour. Show the impact on the graph if a minimum wage of $9 per hour is enacted. 1.) Using the point drawing tool, plot the point that illustrates the quantity of labor demanded when the minimum wage is set at $9 per hour. Label your point 'A.' 2.) Using the point drawing tool, plot a point that illustrates the quantity of labor supplied when the minimum wage is set at $9 per hour. Label your point 'B.' Carefully follow the instructions above and only draw the required objects. the lower when the minimum wage is $9 would be
- firms that hire low-skill workers at the new wage - low-skill workers who lose their jobs due to a lack of demand for workers - low-skill workers who now cannot find jobs due to increased competition for jobs
The losers when the minimum wage is $8 would be ___________.
- firms that hire low-skill workers at the new wage - low-skill workers who now cannot find jobs due to increase competition for jobs - low-skill workers who lose their jobs due to a lack of demand for workers
frictional unemployment can result when ______
- it takes time for applicants to prepare a resume and line up references - firms and workers have imperfect information about each other - firms and workers have imperfect information about the state of the economy
What other reasons might explain why unemployment is lower among workers with a relatively higher level of education?
- more educated workers have more human capital - more educated workers have a higher opportunity cost of time - workers with a higher level of education are in greater demand by firms
historically, the targeted goal for unemployment is (zero/9%-10%/4%-5%). An unemployment rate higher than this target would generate high economic an (social/production) costs.
4%-5%; social - long-term unemployment generates four simultaneous traumas: a loss of income, skills, social interaction, and perceived self-worth. A high unemployment rate takes more time to fix and affects more people
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. the value of the marginal product of labor for the sixth hour of labor is
5*$1.5 = 7.5 I used the marginal product of labor for the sixth worker and multiplied it by the bracket the manufactures sell their product for
The graph on the right shows a labor supply and labor demand curve. Illustrate the impact of union pay that pushes the wage to $9 per hour. 1.) Using the point drawing tool, place a point on the graph that illustrates the market-clearing wage and quantity of labor. Label your point 'Market clearing.' 2.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor demanded under union pay that results in a wage of $9 per hour. Label your point 'A.' 3.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor supplied under union pay that results in a wage of $9 per hour. Label your point 'B.' The quantity of labor demanded at the market-clearing wage is_______ thousand, and the quantity of labor demanded at union pay of $9 is _______ thousand.
5.5; 2
The graph on the right shows a labor supply and labor demand curve. Illustrate the impact of union pay that pushes the wage to $9 per hour. 1.) Using the point drawing tool, place a point on the graph that illustrates the market-clearing wage and quantity of labor. Label your point 'Market clearing.' 2.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor demanded under union pay that results in a wage of $9 per hour. Label your point 'A.' 3.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor supplied under union pay that results in a wage of $9 per hour. Label your point 'B.' The quantity of labor supplied at the market-clearing wage is _______ thousand, and the quantity of labor supplied at union pay of $9 is_______ thousand.
5.5; 9 (at first in this question I confused the quantity of labor demanded with the quantity of labor supplied at union pay)
Suppose that in January there were 4,000,000 workers in the labor force, with 3,736,000 employed and 264,000 unemployed, implying a 6.6 percent unemployment rate. A month later, there were 4,170,000 workers in the laborforce, with 3,911,000 employed and 259,000 unemployed. (Notice the number employed went from 3,736,000 to 3,911,000,an increase of 175,000.) The unemployment rate in February is
6.21%
Consider the labor market for denim jeans and identify the direction of a shift in the labor demand curve (D) or labor supply curve (S) as a result of the following factors. decrease in demand for denim jeans
A decline in the demand for denim jeans impacts the value of the marginal product of workers even if it does not directly change the price of denim jeans. Such declines in demand for output will shift the labor demand curve (D) to the left.
Some countries, such as the UK, have attempted to reduce youth unemployment by implementing a lower minimum wage for workers under the age of 20. Which of the following outcomes is likely to occur if the minimum wage is lowered?
A lower minimum wage would address structural unemployment. However, we would also expect the lowering of the minimum wage to slightly increase voluntary unemployment as some people would not want to work for the lower wage(because they find leisure more valuable). Voluntary unemployment will increase if firms are not willing to hire unskilled workers. Involuntary unemployment will increase if firms are not willing to consider young workers as good substitutes for experienced workers. - involuntary unemployment could increase because now firms will not be willing to consider young workers as good substitutes for experienced workers - voluntary unemployment could increase because people will now value leisure more than work
Consider the labor market for denim jeans. Suppose in the given graph, D1 and S1 are the demand curve for labor and the supply curve of labor respectively. at a wage w*, the quantity of labor (demanded/supplied) would exceed the quantity of labor (demanded/supplied) and push wage (down/up)/
Equilibrium is the point of intersection between the labor supply and labor demand curves (w*). w* is the unique wage that equates the quantity of labor supplied and the quantity of labor demanded. At a wage below w*, the quantity of labor demanded would exceed the quantity of labor supplied and push the wage up. When changes in technology increase the value of the marginal product of labor, the labor demand curve shifts to the right. The changing tastes or social norms affect people's willingness to take a paid job. The newly introduced shift duty system decreases workers' willingness to work in denim jeans factories. As a result, the labor supply curve shifts to the left. ans: demanded; supplied; up
Consider the labor market for denim jeans and identify the direction of a shift in the labor demand curve (D) or labor supply curve (S) as a result of the following factors. increase in immigration
Immigration increases the size of the population which increases the number of potential workers in the economy. Therefore, this inflow shifts the labor supply curve (S) to the right.
which of the following would not be an example of someone in the labor force?
Mark, 45, a self-made millionaire, who volunteers full-time between several local charities
Countries around the world have faced a youth unemployment crisis in recent decades. According to a report by the International LabourOrganization, the global youth unemployment rate in 2016 was 2.9 times higher than the global adult rate. Suppose that the labor market shows the demand and supply curves for workers over the age of 22 with a minimum wage of $10. Which of the following factors will result in an increase in structural unemployment? (Select all that apply)
Structural unemployment results when the market wage is above themarket-clearing wage, causing the quantity of labor supplied to be greater than the quantity of labor demanded. In this case, structural unemployment could increase because of an influx of young workers or because of the reluctance of employers to hire unskilled workers. Structural unemployment results when the market wage is above themarket-clearing wage, causing the quantity of labor supplied to be greater than the quantity of labor demanded. In this case, structural unemployment could increase because of an influx of young workers or because of the reluctance of employers to hire unskilled workers. ans - an influx of young workers - the reluctance of employers to hire unskilled workers
Which of the following data sources are required to understand the impact of the demand-side effect and the supply-side effect on structuralunemployment?
The data sources should be, for example, data on how many youth are hired across industries and the associated wages or data on wages for jobs that youth accept. Ideally, hourly wage data could give a disaggregated look at the willingness of youth to substitute work for leisure. The data sources should be, for example, data on how many youth are hired across industries and the associated wages or data on wages for jobs that youth accept. Ideally, hourly wage data could give a disaggregated look at the willingness of youth to substitute work for leisure. ans - data on wages for various jobs accepted by youth - data on the number of youths hired across industries
Consider the labor market for denim jeans and identify the direction of a shift in the labor demand curve (D) or labor supply curve (S) as a result of the following factors. decrease in price of denim cloth
When the cost of denim cloth (input used to produce denim jeans) falls, the factories acquire more denim cloth. As a result, the workers can produce more denim jeans per hour. This will increase their value of marginal product and shift the labor demand curve (D) to the right.
Consider the labor market for denim jeans and identify the direction of a shift in the labor demand curve (D) or labor supply curve (S) as a result of the following factors. increase in opportunity cost of time that is spent on him production
When the opportunity cost of home production rises, workers increase their labor force participation because spending time on household chores becomes costlier.Therefore, the labor supply curve (S) shifts to right.
Consider the labor market for denim jeans and identify the direction of a shift in the labor demand curve (D) or labor supply curve (S) as a result of the following factors. increase in price of denim jeans.
When the price of denim jeans goes up, the value of the marginal product of workers also rises. This implies that the firm would like to hire more workers at any given wage, shifting the labor demand curve (D) to the right.
If this market were frictionless and could adjust freely, then over time we would expect ____________.
When the wage moved to $6 per hour, it created a shortage in the labor market, since there were fewer people willing to work at that wage than firms wanted to hire. an increase in the wage rate, since there are fewer people looking for jobs at the wage than firms want to hire
The graph on the right shows a labor market in equilibrium. Using the graph, demonstrate the impact of a decrease in the wage rate to $6 per hour. Assume all other factors in the economy are constant. 1.) Using either the line drawing tool or the arrow drawing tool, illustrate the impact on labor demand of a decrease in the wage rate to $6 per hour. (Use the line drawing tool to illustrate a shift in demand or the arrow tool to illustrate a movement along the demand curve.) Label your curve 'New demand.' 2.) Using either the line drawing tool or the arrow drawing tool, illustrate the impact on labor supply of a decrease in the wage rate to $6 per hour. (Use the line drawing tool to illustrate a shift in supply or the arrow tool to illustrate a movement along the supply curve.) Label your curve'New supply.'
When there is a decrease in the wage rate, there will be a movement down along the supply and demand curves. This creates a shortage of labor.
The graph on the right shows the demand and supply curves in the market for workers in Starbucks coffee shops (called "baristas"). Assume that Starbucks baristas are unwilling to accept a wage lower than $8 per hour, causing the wage to be fixed at that level. Suppose that, due to concerns about the high number of calories in many Starbucks drinks, the demand for Starbucks products declines. Use a graph to explain what will happen to employment in the market for baristas? 1.) Using the line drawing tool, plot either a new labor supply or labor demand curve that would result from the decline in Starbucks sales. Label your line appropriately. 2.) Using the point drawing tool, plot a point that illustrates the new quantity of labor supplied when the wage rate is fixed at $8 per hour. Label your point 'A.' 3.) Using the point drawing tool, plot a point that illustrates the new quantity of labor demanded when the wage rate is fixed at $8 per hour. Label your point 'B.' suppose the wage is flexible. Now, the impact from the decline in demand for Starbucks products would lead to
a decrease in employment but not by as much as under the fixed-wage rate system
the goal of a country with a healthy economy is to have ____ equal to zero
a healthy economy would expect some level of unemployment, since it is time consuming for firms to find preferred workers and for workers to choose their preferred job. the unemployment that arises from this necessary process is called frictional unemployment. cyclical unemployment
the demand for labor
an important fact about labor demand is that firms typically experience diminishing marginal product of labor. diminishing marginal product of labor means that each worker creates less marginal output than the workers who were hired before. for example, additional workers increase output, but each additional worker won't be as productive as the last one reflects diminishing marginal productivity
the supply curve is derived from the concept that
as wages increase, the opportunity cost of leisure increases, leading people to work more hours
which of the following factors does not cause a shift in the labor demand curve
changes in wage rate
compute the extent of cyclical unemployment in percentage terms
cyclical unemployment = actual rate of unemployment - natural rate of unemployment 3.6 - 4.4 = -0.8
Suppose it is claimed that actual real GDP deviates from potential real GDP by 2% for every percentage point of negative cyclical unemployment. In other words, assume that actual real GDP falls below (or rises above) potential real GDP by 2% when the rate of unemployment rises above (or falls below) the natural rate of unemployment by 1%. Given the cyclical unemployment rate recorded above, this translates into actual real GDP deviating from potential real GDP by $_____ billion.
cyclical unemployment rate is -0.8 GDP gap = -0.8 * .02 = -.0016 GDP dap = -.0016 * 20003.7 = -320.0592 (Be sure to convert 2% to decimal before multiplying the cyclical unemployment rate. This result is then multiplied by the value of potential real GDP (20003.7 to obtain the answer.) (Given the cyclical unemployment rate recorded above, this translates into actual real GDP deviating from potential real GDP by -1 * (-0.8 * .02) * 20003.7 = $320.1 billion) - for march of 2022, actual real GDP rises above potential real GDP
the equilibrium wage ____ and the equilibrium quantity of workers ___
decreased; increased
Suppose the local pizza restaurant wants to hire another delivery driver to replace the worker who recently quit. The former worker could make 40 deliveries per week. The restaurant has received three applications from equally qualified workers. If it hires any one of these workers, it could boost deliveries by 30 deliveries per week. If each of these applicants is capable of boosting deliveries by 30 per week, what would happen to deliveries if the restaurant hired all three of the applicants?
deliveries would increase by less than 90 per week, since there will be diminishing marginal product of labor
When employed individuals become unemployed, the civilian labor force (rises/does not change/falls)
does not change the civilian labor force consists of employed and unemployed persons. thus, when previously employed individuals become unemployed, the civilian labor force remains unchanged, although its composition is altered
When employed individuals become unemployed, the civilian labor force
does not change (because labor force is employed + unemployed)
this results in a labor demand curve that is (upward-sloping/downward-sloping/always horizontal)
downward-sloping
Identify the category in which the Department of Labor would classify the following people. Irene, a trained medical doctor, is working part-time as a taxi driver too, for extra income. (unemployed, employed, or not in the labor force)
employed
Given the change in cyclical unemployment over this two-year period, it can be concluded that the economy has
expanded
whoever the economy's actual rate of unemployment falls below its natural rate as was the case in March, 2022, it can be deduced that potential real GDP ___ actual real GDP for that period
falls below
Given the that unemployment level of men exceeds the unemployment level of women, it follows that the unemployment rate for men will be higher than the unemployment rate for women. the claim is
false
which of the following is not an example of someone who is frictionally unemployed
frictional unemployment is unemployment that arises because workers have imperfect information about available jobs and need to engage in a time-consuming process of job search carl, who is currently taking classes full time in order to qualify for a management position
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. If the wage is $25/hour, but the price of a bracket declines to $1.00, it should employ ____ workers
hire 3 workers subtract the the 3rd worker output by the second and multiply by $1.00
when there is an increase in the wage rate paid to workers, the supply of labor will
increase and move up along the curve
when there is an increase in population, the supply of labor will
increase and shift to the right
the equilibrium wage _____ and the equilibrium quantity of workers hired ____
increased; increased
revenue
is the income generated by the sale of goods or services to the company's primary operations; differs from profit because it does not take into account the expenses, debts, additional income streams, and operating costs
In February 2014, the US added 175,000 jobs to the economy. Given this information, what can we say about the unemployment rate of the country?
it may increase, decrease, or not change depending on how many people started searching for jobs during the month
In February 2014, the United States added 175,000 jobs to the economy. Given this information, what can we say about the unemployment rate of the country?
it may increase, decrease, or not change depending on how many people started searching for jobs during the month
which of the following is true regarding wage rigidity?
it occurs when the wages are held fixed above the competitive equilibrium level
which of the following is true regarding wage rigidity
it occurs when wages are held fixed above the competitive equilibrium level
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. if the wage paid to workers in Die Cast's plant is $25/hour, it should hire blank workers
it should employ the third worker because it has a marginal product of 30 (120-90) and its market value is 30*$1.00=$30
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. If the wage paid to workers in Die Cast's plant is $35/hour, it should employ blank workers
it should employ two workers because it has a marginal product of 40 (90-50) and its market value is 40*$1.00 = $40
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. if the wage is $25/hour, but the price of a bracket declines to $0.50, it should employ blank workers
it should hire one worker because it has a marginal product of 50 (50-0) and its market value is 50 *.50 = $25
The following table lists the employment statistics of Australia for the years 2003-2007. Complete the table by filling out the missing values. employed workers.
labor force - unemployed unemployment rate = (unemployed/labor force) *100 4.8 = ?/10,804,141 --> 518,599 employed = 10,804,141 - 518,599 = 10,285,542
the value of the marginal product of labor is the
market value of a worker's additional output for a firm (market value is the amount for which something can be sold on a given market)
The impact of the minimum wage on the labor market as a whole is (large/modest) since (around 1 percent/around 25 percent/nearly 50 percent) of workers earn the minimum wage rate.
modest; around 1 percent
In the data given above, the unemployment rate shows a (negative/positive)trend which suggests the Australian economy was in a (boom/recession) during this period.
negative; boom
Identify the category in which the Department of Labor would classify the following people. A 15 year old Felicia has been actively looking for a paid internship since two months. (unemployed, employed, or not in the labor force)
not in the labor force
Identify the category in which the Department of Labor would classify the following people. After months of searching for a job with no success, Elton has Stopped looking for one. (unemployed, employed, or not in the labor force)
not in the labor force
Explain whether each of these individuals will be counted as a part of the labor force. Alex recently retired after working for the same company for 30 years. John is a full - time stay - at - home parent while his wife works. We know that Alex is blank and we know that John is blank.
not in the labor force; not in the labor force
structural unemployment
occurs when there is a persistent gap between the quantity of labor supplied and the quantity of labor demanded. the cause of this gap is usually wage rigidity, not the job search process.
Which of the following people are counted as potential workers?
people who are already employed full-time
the labor force is equal to the number employed blank the number unemployed
plus
The following table lists the employment statistics of Australia for the years 2003-2007. Complete the table by filling out the missing values. not in the labor force.
potential workers - labor force 13,724,965 - 10,551,287 = 3,173,678
The following table lists the employment statistics of Australia for the years 2003-2007. Complete the table by filling out the missing values. labor force.
potential workers - not in the labor force 13,532,824 - 3,305,830 = 10,226,994
The following table lists the employment statistics of Australia for the years 2003-2007. Complete the table by filling out the missing values. potential workers and unemployment rate.
potential workers = labor force + not in the labor force 10,980,900 + 3,090,802 = 14,071,701 unemployment rate = ((labor force - employed)/labor force) *100 ((10,980,900 - 10,497,740)/10,980,900)*100 = 14071702
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. the value of the marginal product of labor for the fifth hour of labor is
price * marginal product of labor = 1 * 10 = 10
The fact that unemployment is lower among workers with a relatively higher level of education can be explained in part by the
principles of optimization
Some countries, such as the UK, have attempted to reduce youth unemployment by implementing a lower minimum wage for workers under the age of 20. the lowering of the minimum wage is likely to (increase frictional/increase structural/reduce frictional/reduce structural) unemployment since the age is now (closer to/further away from) the market wage.
reduce structural; closer to
An economy's natural rate of unemployment reflects the combine effect of frictional and ___ unemployment
structural
According to the graph, when the minimum wage is set at $8 per hour, there will be ____________ unemployment of ____________ workers in this market.
structural; 4 million
The graph on the right shows the demand for and supply of labor in a market with an equilibrium wage rate of $7 per hour. Show the impact on the graph if a minimum wage of $9 per hour is enacted. 1.) Using the point drawing tool, plot the point that illustrates the quantity of labor demanded when the minimum wage is set at $9 per hour. Label your point 'A.' 2.) Using the point drawing tool, plot a point that illustrates the quantity of labor supplied when the minimum wage is set at $9 per hour. Label your point 'B.' Carefully follow the instructions above and only draw the required objects. According to the graph, when the minimum wage is set at $9 per hour, there will be blank unemployment of blank workers in this market
structural; 4 million
The graph on the right shows a labor supply and labor demand curve. Illustrate the impact of union pay that pushes the wage to $9 per hour. 1.) Using the point drawing tool, place a point on the graph that illustrates the market-clearing wage and quantity of labor. Label your point 'Market clearing.' 2.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor demanded under union pay that results in a wage of $9 per hour. Label your point 'A.' 3.) Using the point drawing tool, place a point on the graph that illustrates the quantity of labor supplied under union pay that results in a wage of $9 per hour. Label your point 'B.' Using your graph, the introduction of union pay of $9 per hour leads to ______ unemployment equal to _____ thousand.
structural; 7.0 (subtract the 9-2 = 7; look at graph)
The graph on the right shows the demand and supply curves in the market for workers in Starbucks coffee shops (called "baristas"). Assume that Starbucks baristas are unwilling to accept a wage lower than $8 per hour, causing the wage to be fixed at that level. Suppose that, due to concerns about the high number of calories in many Starbucks drinks, the demand for Starbucks products declines. Use a graph to explain what will happen to employment in the market for baristas? 1.) Using the line drawing tool, plot either a new labor supply or labor demand curve that would result from the decline in Starbucks sales. Label your line appropriately. 2.) Using the point drawing tool, plot a point that illustrates the new quantity of labor supplied when the wage rate is fixed at $8 per hour. Label your point 'A.' 3.) Using the point drawing tool, plot a point that illustrates the new quantity of labor demanded when the wage rate is fixed at $8 per hour. Label your point 'B.' given your graph, the total amount of unemployment that would result from the decline in demand for Starbucks products along with having a fixed wage at $8 can be found by
subtracting the quantity of labor at point B from the quantity of labor at point A
Suppose a shift duty system is introduced in denim jeans factories, which means that some workers will now have to work in night shifts. This impacts the taste of workers and decreases their willingness to work. This will shift the labor (supply curve to the left/demand curve to the right/demand curve to the left/supply curve to the right)
supply curve to the left
the value of a worker's marginal product is
the additional revenue that a worker will generate for the firm
which of the following is not one of the factors that can increase wage rigidity in the labor market?
the economy falling into a recession
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.50. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. if the paid to workers in Die cast's plant is $25/hour, it should employ _____ workers
the following table shows the marginal product and the value of marginal product of labor for various hours of labor. a firm will keep hiring as long as the additional revenue that an additional hour produces (as measured by the VMPL) is at least as great as the wage the additional hour earns. (140-120)*1.50 = 30 sot the fourth worker this is subtracting the output for worker 4 by worker 3 and then multiplying by the sells value given ($1.5)
Assume that 1 million immigrants enter the United States this year and that some of these immigrants work in the home construction industry. On Figure 1, graph the impact of immigration on the supply of labor and the resulting new equilibrium wage and quantity. 1) Using the multipoint drawing tool, draw the new labor supply curve. Label the line as 'LS2'. (Use the "Esc" key after you have placed your last point to exit the drawing tool). 2) Using the point drawing tool, indicate the new equilibrium in the labor market. Label the point as 'E2'.
the increase immigrant labor working in the home construction industry causes an increase in labor supply which is illustrated as a rightward shift of the supply curve. the new equilibrium is located at the intersection of the original labor demand curve and the new labor supply curve. the equilibrium wage decreases and the equilibrium quantity of workers increases.
considering both the change in supply and the demand for labor in the home construction industry, what can you conclude about the change in the equilibrium wage and quantity of workers hired?
the increase in labor supply due to immigration resulted in the equilibrium wage decreasing and the equilibrium quantity of workers increasing. the increase in demand for housing resulted in the equilibrium wage increasing and the equilibrium quantity of workers increasing. if both labor supply and demand shifted, it is apparent that the quantity of workers would increase but the impact on the equilibrium wage would depend on the sizes of the shift. the equilibrium wage may increase or decrease but the quantity of workers hired will increase
The graph on the right shows the demand for and supply of labor in a market with an equilibrium wage rate of $7 per hour. Show the impact on the graph if a minimum wage of $9 per hour is enacted. 1.) Using the point drawing tool, plot the point that illustrates the quantity of labor demanded when the minimum wage is set at $9 per hour. Label your point 'A.' 2.) Using the point drawing tool, plot a point that illustrates the quantity of labor supplied when the minimum wage is set at $9 per hour. Label your point 'B.' Carefully follow the instructions above and only draw the required objects. using the graph, we can see that if the minimum wage were set at $5 per hour, then
there would be no structural unemployment due to wage rigidity, since the minimum wage is non-binding at $5 per hour
The graph on the right shows a labor market in equilibrium. The equilibrium wage is $10 per hour. At this wage, there are people who are not working, which is represented by the segment of the labor supply curve above the equilibrium wage. Why are these people not working in this market?
these people are only willing to work for wages above the market-clearing wage
calculate cyclical unemployment based on graph
to calculate cyclical unemployment you subtract the total of the frictional unemployment rate and the structural unemployment rate from the current unemployment rate 6.1 - 4.7 = 1.4 4.9 - 4.6 = 0.3
In the data given above, potential workers include the civilian population aged 15-64. If the population aged 0-14 and 65 and above in 2007 was 6,755,898 in Australia, the total Australian population in that year was
total population of Australia = population aged 0-14 + population aged 15-64 + population aged 65 and above therefore, total population = 14,071,702 + 6,755,898 = 20,827,600
Identify the category in which the Department of Labor would classify the following people. Harriet was released from prison last month and has been actively looking for work since. (unemployed, employed, or not in the labor force)
unemployed
Suppose that in January there were 5,000,000workers in the labor force, with 4,670,000 employed and 330,000 unemployed, implying a 6.6 percent unemployment rate. A month later, there were 5,200,000 workers in the labor force, with 4,845,000 employed and 355,000 unemployed. (Notice the number employed went from 4,670,000 to 4,845,000, an increase of 175,000.) the unemployment rate in February is
unemployed/labor force (unemployed+employed) (355,000/5,200,000)*100 = 6.83%
this results in a labor supply curve that is
upward-sloping
firms should hire workers until the ______
value of the marginal product of labor is at least as great as the wage paid
the labor demand curve shows the quantity of labor demanded will decrease as (wages decrease/prices decrease/wages increase)
wage increase
the labor supply curve shows that the quantity of labor will decrease as
wages decrease
which of the following best explains why the labor supply curve slopes upward
when wages increase, the opportunity cost of not working increases, leading people to seek more work hours
those who are voluntarily unemployed are
willing to work, but not at the prevailing wage
what type of unemployment does job search lead to
frictional unemployment
which of the following is an example of what economists refer to as job search
- an individual that engages in the job hunt by determining who is hiring and how much they pay - a person who applies for a high-paying job but does not qualify, so she begins searching for an appropriate position - people that engage in the job hunt by sending out resumes
Suppose Die Cast Aluminum Co. is a subcontractor for the auto industry and makes specialized auto parts. There is a bracket it manufactures that it sells for $1.00. The following table shows the number of brackets that can be produced from a given number of labor hours. Assume that the company cannot hire labor for a fraction of an hour. The marginal product of labor for the fifth hour of labor is
the marginal product of labor for the fifth hour is the difference between the 5 hours of labor and the 4 hours of labor (150-140)= 10
In April 2012, the Bazanian Daily, a leading newspaper in the country of Bazania, carried a report titled "20,000 Jobs Added in the Last Quarter; Unemployment Rate Shoots Up from 5 Percent to 6.7 Percent." How could the unemployment rate in Bazania increase even when new jobs were created?
the new jobs may have made discourage workers optimistic enough to start applying for jobs, thus re-entering the labor force and being counted as unemployed, which causes the overall unemployment rate to increase
which of the following does not cause the labor supply curve to shift
shifts in the labor demand curve that cause a change in the wage rate
