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The downward inflexibility of money wage rates is called:
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Law of diminishing returns |
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- One of the factors in z, the catch-all variable, is the minimum wage, a price floor below which the nominal wage cannot go A decrease in this factor will be expected to the nominal wage.Suppose the labour market is summarised as: Demand: P = 100-Q Supply: P = Q The government imposes a minimum wage. However, consumers (firms) are unsurprisingly unhappy with the increase in wages and are negotiating with labour unions to return to the equilibrium wage. The union will agree to this if firms offer a lump sum transfer to producers (workers) equivalent to the maximum firms are willing to give, $1069.5. How much was the minimum wage? a. $97 b. $81. c. $73 d. $87Explain in detail what will happen to the natural rate of unemployment and the real wage when firms decide to increase their markups.
- Firms in the country of Merka, which experiences varying levels of unemployment over time, face a very competitive labor market. Classify the given events according to how each would affect Merka's unemployment rate. Increase in the unemployment rate Decrease in the unemployment rate Answer Bank decreased unemployment benefits increase in the minimum wage introduction of employment-at-will doctrine increase in unions' influenceWhich of the following statements is false? Unions can have sufficient bargaining power to push wages above competitive market levels. Sticky wage theories cannot explain frictional unemployment. The search and matching model is an example of a sticky wage theory. None of the above statements are false.The labor supply is perfectly inelastic with LS = 5 and the labor demand is based on the competitive model. The marginal productivity is MPL = 10 – L where L is measured in hours worked. Each unit sells for a price of $4. What is the equilibrium wage in this labor market? $__/hr
- The wage elasticity of labor supply can be calculated using the following approach:Group of answer choices The labor force participation rate / the inflation rate % change in wage / % change in quantity of labor supplied % change in quantity of labor supplied / % change in wage % change in quantity of labor supplied / the savings rateWhich of the following statements is correct? A) To increase its profit, the firm always increases its price. B) The firm first sets its profit-maximizing price p*, then the number of employees. C) The firm first decides on the number of employees, then it produces output according to labour productivity. D) Having chosen its profit-maximizing price p*, the firm would then set its nominal wage level.Assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. Draw a supply and demand graph that represents the labor market. Draw a graph that depicts what has happened to our demand and supply curves in the labor market, including our new equilibrium price and quantity of labor. Will the market experience an increase or a decrease in unemployment? Make sure you clearly label your graph, all of its components, and any curve shifts are clearly marked with the beginning and ending curves (you can use 0 and 1 or 1 and 2 to designate the first and the second curves).
- Based on class discussion, the following are corrected descriptions about sectors and dynamics in the Labor Market, EXCEPT: Hi, This is the entire question. It is not incomplete. Question 18 options: Low Skilled Labor has a more Elastic Demand than the High Skilled Labor sector. Low Skilled Labor has a more Inelastic Supply than the High Skilled Labor sector. An aging population could lead to a contraction of the Labor Force and consequent increase of Wages in the market. Higher Pension Benefits will decline the motivation to work, with the consequent decline of market wages.Suppose the minimum wage in this economy is $8.70 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the prevailing wage. If the wage is not allowed to fall below $8.70 per hour, the size of the unskilled labor force is workers are considered unemployed. The unemployment rate is defined as the percentage of unemployed workers in the labor force: Unemployment Rate = Unemployed Labor Force x 100 At a minimum wage of $8.70 per hour, the unemployment rate among unskilled workers is approximately workers, and unskilled 4Look at the graph below. Labor demand falls from D0 to D1 due to an economic recession. What is the resulting wage in the short-run due to this shift in demand? HINT: Consider whether this is a situation in which the wages are sticky or flexible. Wage $? Look at the graph below. Labor demand falls from D0 to D1 due to an economic recession. What is the resulting wage in the short-run due to this shift in demand? HINT: Consider whether this is a situation in which the wages are sticky or flexible. 40 35 30 Wage Rate 25 20 15 10 5 0 DO DI 5 10 15 20 25 30 35 40 Quantity of Labor