Chapter 17 Homework

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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


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