Chapter 17 Homework
Suppose land (in acres) at a busy intersection is a natural resource. The market for land at this intersection is illustrated in the figure to the right. What is the pure rent from this land? Pure rent is $______________ million per acre. (Enter your response rounded to two decimal places.)
$3.25 million per acre
Fill in the blanks in the following table for Tommy's Televisions, where L is the number of workers, Q is the output of televisions per week, MP is the marginal product of labor (television sets per week), P is the product price, MRP is the marginal revenue product of labor (dollars per week), W is the wage rate, and PROFIT is the additional profit from hiring one more worker (dollars per week). First, fill in the marginal product of labor.(Enter numeric responses using integers.) From the information in the table, can you determine whether this firm is a price taker or a price maker? Briefly explain. 1.) Use the line drawing tool to graph this firm's demand for labor. Label this line 'Demand'. 2.) Use the point drawing tool to indicate the profit-maximizing quantity of labor on your demand curve. Label this point 'Point A'. Carefully follow the instructions above, and only draw the required objects.
( SEE IMAGE ATTACHED FOR THE CALCULATIONS) The firm is a price taker in the market for television sets and in the market for labor because it cannot affect the price of televisions or the wage.
If the labor supply curve shifts to the left and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? 1.) Use the line drawing tool to graph a new labor supply curve that has shifted to the left as described above. Label this line 'Labor supply 2Labor supply2'. 2.) Use the point drawing tool to indicate the new equilibrium wage and equilibrium level of employment. Label this point 'Point A'. Carefully follow the instructions above, and only draw the required objects. The equilibrium wage _________________ and the equilibrium level of employment ___________________.
(see image attached for the graph) increases decreases
If the labor demand curve shifts to the right and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? 1.) Use the line drawing tool to graph a new labor demand curve that has shifted to the right as described above. Label this line 'Labor demand 2Labor demand2'. 2.) Use the point drawing tool to indicate the new equilibrium wage and equilibrium level of employment. Label this point 'Point A'. Carefully follow the instructions above, and only draw the required objects. The equilibrium wage ____________ and the equilibrium level of employment _______________.
(see image attached for the graph) increases increases
Use the graphs to the right to answer the questions. What is the equilibrium quantity of sanitary engineers hired, and what is the equilibrium wage? The equilibrium quantity of sanitary engineers is _________ thousand workers and the equilibrium wage is ______ per week. What is the equilibrium quantity of receptionists hired, and what is the equilibrium wage? The equilibrium quantity of receptionists is _____________ thousand workers and the equilibrium wage is $__________________ per week. Briefly discuss why sanitary engineers might earn a higher weekly wage than receptionists. Sanitary engineers may earn higher wages than receptionists ___________. Suppose that comparable-worth legislation is passed and the government requires that sanitary engineers and receptionists must be paid the same wage of $500 per week. Now how many sanitary engineers will be hired and how many receptionists will be hired? With the comparable-worth legislation, ___________ thousand sanitary engineers will be hired, and ____________ thousand receptionists will be hired.
8 thousand workers $300 per week 13 thousand workers $350 per week. all of the above A. due to differences in productivity. B. due to compensating differentials because the work of sanitary engineers is dirty and unpleasant. C. due to discrimination. D. both a and b. 6 thousand sanitary engineers will be hired , 10 thousand receptionists will be hired.
Which of the following is an example of a monopsony? An example of a monopsony is _________________. Compared to perfectly competitive input markets, a monopsony, such as the coal mining firm in West Virginia.
A coal mining firm in a small town in West Virginia that is the only employer of labor in that location. creates deadweight loss by hiring fewer workers.
Which of the following correctly explains the effect of a variable on the labor demand curve?
If technology improves, then the labor demand curve will shift to the right. OR If the quantities of other inputs increase, then the labor demand curve will shift to the right.
Labor economists have recently begun focusing on a new area referred to as personnel economics. Describe what personnel economics might study. Personnel economics examines all of the following issues except
The determinants of changes in average wages over time.
What is the difference between the marginal product of labor and the marginal revenue product of labor for a firm in a perfectly competitive market?
The marginal revenue product of labor is equal to the marginal product of labor multiplied by the product price.
Do union workers earn higher or lower wages than nonunion workers? Explain briefly. Economists have estimated that being in a union increases a worker's wages about ___________________ percent, holding constant other factors. (Enter your response as an integer.)
Union members earn more than nonunion members at least partially because union members work in industries where wages are relatively high regardless of unions. 10
Suppose the wage decreases. What effect will this have on a worker's labor supply? The substitution effect of a wage decrease causes the worker to supply ______________ quantity of labor. The income effect of a wage decrease causes the worker to supply _________________ quantity of labor. If the substitution effect is bigger than the income effect, then the supply curve will slope _______________.
a smaller a larger upward
What is personnel economics? Personnel economics is
both a and b A- the application of economic analysis to human resource issues such as the link between differences among jobs and differences in the way workers are paid. B-the application of economic analysis to human resource issues such as promotions
The figure compares the compensation that a shoe salesperson receives if she is on a straight salary of $60 per day or if she receives a commission of $5 for each pair of shoes sold. Which compensation structure is preferred by the salesperson? Suppose the salesperson sells more than 12 pairs of shoes per day and only cares about compensation. For the salesperson, the___________ is preferred. Suppose the shoe store owner's goal is to sell as many pairs of shoes as possible. For the store owner, the ____________ is the preferred form of compensation.
commission commission
Suppose a firm may choose between paying workers based on straight-time pay or by commission. Why might a firm choose to compensate its workers by commission? A firm might choose to pay its workers commissions instead of straight-time pay because
commissions attract the most productive employees
Baseball writer Rany Jazayerli assessed the Kansas City Royal's outfielder Jose Guillen as follows: "Guillen has negative value the way his contract stands." Source: Rany Jazayerli, "Radical Situations Call for Radical Solutions," ranyontheroyals.com, June 6, 2009. How could a baseball player's contract cause him to have negative value to a baseball team? Jose Guillen would have negative value to the Kansas City Royals if
his salary is greater than his marginal revenue product.
White males earn on average over $10,000 more annually than black males. Is this due to economic discrimination? The wage gap between white males and black males
is partly due to economic discrimination and partly due to differences in experience.
Suppose Sony makes PlayStation 3 using capital. In what way is capital a derived demand? Capital for Sony to make PlayStation 3 is a derived demand because
it depends on consumer demand for PlayStation 3.
What effect does experience have on the wage gap between men and women? Comparing men and women of the same age, many women
leave the workforce after having a child, so men have more work experience, which raises productivity and increases the male-female wage gap.
Daniel had been earning $73 per hour and working 45 hours per week. Then Daniel's wage changes to $77 per hour, and as a result, he now works 40 hours per week. What can we conclude from this information about the income effect and the substitution effect of a wage change for Daniel? The substitution effect causes Daniel to devote ____________ time to working, the income effect causes Daniel to devote ______________ time to working, and the substitution effect is _______________ the income effect.
more less smaller than
Why are major league baseball players on average paid substantially more than college professors? Explain. Major league baseball players are paid more than college professors because
the marginal revenue product of major league baseball players is high relative to college professors.
What is a monopsony? A monopsony is
the only buyer of a factor of production.
What are the three most important variables that cause the market supply curve for labor to shift? The supply curve for labor shifts with changes in
the population, demographics, and opportunities in other labor markets.
What is a compensating differential? Give an example. A compensating differential is
when higher wages are paid to compensate a worker for unpleasant aspects of a job, such as when workers are paid higher wages for dirty work.
Men are overrepresented in some jobs (and women are overrepresented in other jobs). Explain these differences. One explanation is
women may be more likely to select jobs that allow them to be home with children in the afternoon.
Suppose workers have the option of working in a dangerous factory or a safe factory. Both jobs require the same productive characteristics, such as education and training. According to compensating differentials, would a law mandating an improvement in safety for the dangerous factory make workers in that factory better off? Given compensating differentials, the safety law ____________________. If the workers in the dangerous factory, absent the safety law, experience cognitive dissonance, then they __________________ the true risk of their job.
would not necessarily make workers in the dangerous factory better off because it would lower their wages. underestimate