Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 17.A, Problem 1ARQ
To determine
Whether the given statement is true or false.
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Which of the following is a method used by unions to increase the demand for their members' labor?
O A. Decrease the marginal product of union members.
O B. Oppose minimum wage laws.
OC. Oppose immigration restrictions.
O D. Support import restrictions.
O E. Increase imported goods and services
The marginal expenditure of a
monopsonist is $9. The wage it
currently pays is $3. The labor supply
curve has a constant elasticity. What
is the elasticity of the labor supply? *
O 3
O 1
0.33
0.5
Which statement is false regarding unions?
O a) With unions successfully raising wages for workers, it can also reduce overall
employment.
b) When unions drive up wages for workers, it results in an incentive for firms to
hire more workers.
OC) Unions drive up wages and benefits for workers by asserting market power
over employers.
O d) It is possible that raising wages for union workers can lead to higher
productivity than nonunion workers because union workers are more likely to
stay on the job longer.
Chapter 17 Solutions
Economics (Irwin Economics)
Ch. 17.3 - Prob. 1QQCh. 17.3 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17.3 - Prob. 4QQCh. 17.A - Prob. 1ADQCh. 17.A - Prob. 2ADQCh. 17.A - Prob. 3ADQCh. 17.A - Prob. 4ADQCh. 17.A - Prob. 5ADQCh. 17.A - Prob. 1ARQ
Ch. 17.A - Prob. 2ARQCh. 17.A - Prob. 3ARQCh. 17.A - Prob. 4ARQCh. 17.A - Prob. 1APCh. 17.A - Prob. 2APCh. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - Prob. 6DQCh. 17 - Prob. 7DQCh. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5P
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- Suppose that there are two sectors in the economy : a unionized and a non - unionized one . The labor demand function in each sector is L = 500,000-25w . There are 500,000 people avail able to supply their labor and their decision doesn't depend on the wage . People in both sec tors are equally skilled and experienced for the job in either sector . Assume that the union sets a wage at the rate of $ 15,000 in the union sector . Hint : for these questions below , use posted textbook solutions file for the end - of - the chapter 10 exercises . 6a). Suppose that each sector decides to hire 50 % of the people available to work and supplying their labor . Calculate what the competitive market wage would be in this case . Show your calcu lations . Answer : 6b) . Calculate how many people will the unionized sector be able to employ at most . Show your calculations . Answer :arrow_forwardYour answer to the previous question can be explained by the differences in the Marginal Cost and Average Total Cost faced by a monopsony vs a perfectly competitive firm. A monopsony's Marginal Cost curve shifts upward, compared to a perfectly competitive firm. A monopsony's ATC curve shifts down and left, compared to a perfectly competitive firm. Why is that the case? O Higher MC curve: A perfectly competitive firm faces an increasing wage. A monopsonist faces a decreasing wage as labor increases Lower ATC curve: By restricting the quantity of labor employed, a monopsonist can lower its average total cost, and earn positive profits O Higher MC curve: A perfectly competitive firm faces a constant wage. A monopsonist has to pay a higher wage as it hires less labor Lower ATC curve: By increasing the quantity of labor employed, a monopsonist can lower its average total cost, and earn positive profits Higher MC curve: A perfectly competitive firm faces a higher price on inputs, and a…arrow_forwardIn the figure to the right, suppose that We is a wage rate of $28 per hour and W₁ is a wage rate of $39 per hour. In addition, Quis 12,000 workers per hour, Q is 16,000 workers per hour, and Q is 21,000 workers per hour. How much more or less do the firms in this industry spend, in total, on the labor employed each hour as a consequence of establishment of the union wage W₁ above the equilibrium wage W? Firms spend a total of $ per hour response as a whole number.) on unionized labor. (Enter your C Wage Rate ($ per hour) Wu We A B S Quantity of Labor per time periodarrow_forward
- Which of the following will occur if labour unions successfully negotiate wage increases for its members? O The relative wages in nonunion sectors decrease. Employment likely increases in the union sector, Employment likely decreases in the nonunion sector. The relative wages of nonunion workers also increase.arrow_forward10 What wage would the union choose if it behaved as a `monopoly union"? What amount of employment would the firm choose in response? Is this outcome on the contract curve? 8 7 Answer: 6 По 5 4 TT Submit Answer 3 2 TT2 1 MRPL 1 3 6 7 8 9. 10 Name an outcome which is a Pareto improvement over the monopoly union outcome. Name an outcome which is Pareto efficient. Answer: If the alternative wage is $3, is this union maximizing the wage bill or economic rent? Answer: Submit Answer Submit Answer Suppose the alternative wage is $7 and the firm and union bargain within a right-to-manage framework. Is the union's preferred outcome within the bargaining range? Answer: Submit Answerarrow_forwardGiven the decline in union membership over the past 50 years, what does the theory of bilateral monopoly suggest will have happened to the equilibrium level of wages over time? Why?arrow_forward
- T True or False. Provide an explanation - all points are awarded on the basis of the explanation. If a firm sells her output in a competitive market, then the overall production of this firm does not depend on whether the firm is a monopsonist in the labour market or whether the labour market is competitive. This follows because the price for her output is determined in the competitive market for the firms output and the firm equates the marginal cost of production to the market price for her output.arrow_forward4. In a small isolated town in the Rocky Mountains the only firm that hires workers is a logging company. The firm's demand for labor and the town's supply of labor are as follows: Wage Quantity Supplicd Quantity Demanded $1 20 220 40 200 3 60 180 4 80 160 5 100 140 120 120 7 140 100 8. 160 80 180 60 10 200 40 a. How much labor will this profit maximizing monopsonist hire? (Assume that labor can only be hired in blocks of 20 units) b. What wage will the monopsonist pay to its workers?arrow_forwardIf a labor union is a sole supplier of labor in an industry, by negotiating with the firms in the industry, it will be able to achieve a wage for its members that is Select the correct answer below: above what the equilibrium wage would otherwise have been. below what the equilibrium wage would otherwise have been. O equal to what the equilibrium wage would otherwise have been. dependent on competition in the labor market.arrow_forward
- The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages, when: O there are few close substitutes for the unionized workers. O trade barriers limit the importation of the product produced by the unionized workers. O the cost of employing the unionized workers is a small part of the total cost of product that they produce. the demand for the product produced by the unionized workers is relatively price elastic. A strike, or the threat of one, is most likely to be effective when: O demand for the firm's product is weak. O foreign competition for the product is high. O the firm has a low product inventory. O demand for the product produced by the union workers is highly elastic.arrow_forwardFigure 13.5 Wage (S) 200- 180- 160- 140- 120- 100 80 60- 40 20 0 MR 10 20 30 40 50 60 70 80 Quantity of labor Reference: Ref 13-7 MC (Figure 13.5) The figure represents a labor union with wage in dollars and quantity of labor in hundreds of hours. If the labor union chooses to maximize total wages, how many workers will it supply? Select one: O A. 4,000 OB. 2,750 O C. 5,000 D. 8,000arrow_forwardDuring the recent auto sales slump, GM, Ford, and Chrysler decided it was cheaper tosell cars to rental companies at a loss than to lay off workers. That’s because closingand reopening plants is expensive, partly because the auto makers’ current unioncontracts obligate them to pay many workers even if they’re not working.When the article discusses selling cars “at a loss,” is it referring to accounting profit oreconomic profit? How will the two differ in this case? Explain briefly.arrow_forward
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