Question 1

Since 1950,the ratio of working women to the female population-the female labor participation rate-has increased steadily over time.How can you explain the fact that more and more women are working outside the home while paying others to babysit their children at home?

Accepted Answer

The answer of Since 1950,the ratio of working women to...

Question 2

People often complain that sanitation workers are overpaid based on their level of education.Use the idea of compensating differentials to explain why sanitation workers' wages are relatively high.

Accepted Answer

The answer of People often complain that sanitation workers are...

Question 3

Funny Farm is a 400-acre profit-maximizing farm that produces wheat.The wheat industry is competitive and the price of wheat is $5 per bushel.The relationship between the number of workers the farm hires and the production of wheat is shown in the table below.  (A)Calculate the marginal product and the marginal revenue product of labor for Funny Farm.
(B)If the wage for farm workers is $16,000 per year,how many workers will the farm hire? Explain.
(C)Suppose the yearly wage for farm workers is $16,000,the fixed rent is $30,000 per year,and there are no other costs.Calculate the farm's profits or losses.Will there be entry into or exit from this industry?

Accepted Answer

The answer of Funny Farm is a 400-acre profit-maximizing farm...

Question 4

A credit-card company is considering using telephone solicitation to increase its sales.Under what circumstances should it pay its solicitors a commission for every lead provided,and under what circumstances should it pay them an hourly wage?

Accepted Answer

The answer of A credit-card company is considering using telephone...

Question 5

Use the definition of the demand for labor as the marginal revenue product of labor to show how the two statements below can explain why there has been a decline in unskilled workers' real wages.
(A)New methods of production are requiring more highly-skilled workers who are more flexible and better able to switch between different tasks.
(B)Global competition in industries that utilize unskilled labor has driven down the prices of the products sold by these industries.

Accepted Answer

The answer of Use the definition of the demand for...

Question 6

A monopsony is a single seller.

Accepted Answer

A monopsony is a single buyer in a market with many sellers.

Question 7

Briefly provide two explanations why union wages are higher than nonunion wages.

Accepted Answer

The answer of Briefly provide two explanations why union wages...

Question 8

Unionists often justify their seemingly monopolistic tactics by claiming that businesses are monopsonists.

Accepted Answer

Unionists argue that businesses have the power to control wages and working conditions because they are the sole purchaser of labor in a given market, making them a monopsonist. Therefore, unions aim to balance this power dynamic through collective bargaining and negotiations for better wages and working conditions.

Question 9

A monopsony is a

Accepted Answer

A monopsony is a market situation where there is only one buyer for a particular product or service. This means that the monopsonist has considerable market power and can dictate the price at which it buys from suppliers. This is in contrast to a monopoly, where there is only one seller in a market.

Question 10

Bilateral monopoly occurs when monopolies in two different industries try to enter each other's industries.

Accepted Answer

Bilateral monopoly occurs when a single buyer faces a single seller and both have market power. It does not involve two monopolies trying to enter each other's industries.

Question 11

Suppose a firm with some market power faces a downward-sloping demand curve for the product it produces.Given the following information on demand,complete the table and draw the resulting demand curve for labor.If the hourly wage rate is $4 per hour,how many workers will this firm hire?

Accepted Answer

The answer of Suppose a firm with some market power...

Question 12

The only explanation for union wages being higher than nonunion wages is that unions monopolize labor and restrict labor supply.

Accepted Answer

Union wages may be higher than nonunion wages due to factors such as collective bargaining and better worker protections, not just because of monopolizing labor or restricting labor supply.

Question 13

Union leaders often claim that they must establish the union as a monopoly provider of labor in order to offset the market power of employers.This claim essentially states that unionized firms are

Accepted Answer

The claim that unions must establish a monopoly in order to offset employer power suggests that employers have monopsony power in the labor market, meaning they are the only buyer of labor and can drive down wages. By establishing a union monopoly, workers are able to bargain collectively and negotiate higher wages and better working conditions. This does not necessarily mean that unionized firms themselves are monopolies.

Question 14

Under a bilateral monopoly situation,price is determined by

Accepted Answer

In a bilateral monopoly situation, both the monopolist (seller) and the monopsonist (buyer) have market power and can influence the price. The price is determined through bargaining between the two parties, resulting in a price that maximizes the joint profit or surplus of both the buyer and seller. Thus, the correct choice is D, bargaining.

Question 15

Suppose the government is considering implementing a minimum wage of $10.With the aid of a graph,explain the consequences of the minimum wage law in the competitive labor market.Your explanation should include the gains or losses to firms,workers,and society as a whole.

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The answer of Suppose the government is considering implementing a...

Question 16

Use a typical diagram of supply and demand for labor to represent the market for lawyers.Suppose the wage for lawyers employed by large law firms is above the equilibrium level.Depict this scenario in your diagram.Will there be a shortage or a surplus of lawyers at this wage rate? This is an inefficient situation based on the supply and demand model.Give one reason why it may persist over time.

Accepted Answer

The answer of Use a typical diagram of supply and...

Question 17

The market in which there is only one buyer of an input and one seller of the input is called a

Accepted Answer

A bilateral monopoly occurs when there is only one buyer and one seller in the market, making both parties monopolists in their respective roles.

Question 18

Analyze the labor supply schedules for Mary and Anne based on the data given in the table below.  (A)Draw the labor supply schedules for the two individuals.
(B)Who probably has a higher level of education? Why?
(C)At what point does the income effect begin to outweigh the substitution effect for Anne? Explain.

Accepted Answer

The answer of Analyze the labor supply schedules for Mary...

Question 19

Recently,there has been an increased demand for wind power as an alternative energy source.How will this affect the marginal product,marginal revenue product,and wages of workers in the wind power industry?

Accepted Answer

The answer of Recently,there has been an increased demand for...

Quiz 13: Labor Markets