Question
In: Economics
At the competitive wage of $20 per hour, firms A and B both hire 5,000 fulltime...
At the competitive wage of $20 per hour, firms A and B both hire 5,000 fulltime workers (2,000 hours per year). The elasticity of demand for firm A is -2.5 and the elasticity of demand for firm B is -0.75. Workers at both firms unionize and negotiate a 12 percent wage increase.
a.What is the effect on employment at firm A? How has total worker income changed?
b.What is the effect on employment at firm B? How has total worker income changed?
c.How much would the workers at each firm be willing to pay in annual union dues in order to unionize (and receive the 12 percent wage increase)?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
In a particular family, both spouse A and spouse B could earn $20 per hour in...
In a particular family, both spouse A and spouse B could earn
$20 per hour in market work. Both of them enjoy cooking and taking
care of their children and agree on an egalitarian division of
house chores. However, spouse A has a comparative advantage in the
production of home-produced goods. Based on Gary Becker’s model of
time allocation, how does this family make a decision regarding
their use of time?
In a particular family, both spouse A and spouse B could earn $20 per hour in...
In a particular family, both spouse A and spouse B could earn
$20 per hour in market work. Both of them enjoy cooking and taking
care of their children and agree on an egalitarian division of
house chores. However, spouse A has a comparative advantage in the
production of home-produced goods. Based on Gary Becker’s model of
time allocation, how does this family make a decision regarding
their use of time?
A firm can hire 20 workers for $10 per hour, but finds it must raise the...
A firm can hire 20 workers for $10 per hour, but finds it must
raise the wage to $12 to attract another worker. If it must pay all
its workers the same wage, the marginal wage cost of the 21st
worker is _.
A.$10.
B. $11.
C. $21.
D. $31.
1. Monopolistic competitive firms and perfectly competitive firms are similar in that both
1. Monopolistic competitive firms and perfectly competitive firms
are similar in that bothGroup of answer choicesset price equal to marginal cost.face a horizontal demand curve.face no barriers to entry or exit.produce a homogeneous product.all of the above2. Does the monopolistic competitive firm exhibit
resource-allocative efficiency?Group of answer choicesNo, because at its chosen quantity of output, price does not
equal the lowest possible average total cost.Yes, because at its chosen quantity of output, price equals
marginal cost.No, because at its chosen...
Suppose that Marta's hourly wage is $20 per hour, her rental property yields $100 per day,...
Suppose that Marta's hourly wage is $20 per hour, her
rental property yields $100 per day, and she has 16 hours in a day
to allocate between leisure and work.
a. What is her daily budget constraint? Draw it in a
diagram.
b. How much can Marta consume if she enjoys 16 hours of
leisure?
c. Suppose that the government imposes a 25% income tax.
What is her budget constraint now? n the same diagram, using a
dashed line, draw...
2.Assume that the federal government mandates a minimum wage of $20 per hour for all fast...
2.Assume that the federal government mandates a minimum wage of $20
per hour for all fast food workers in the United States. Thinking
of the Hicks-Marshall Laws of Derived Demand, describe the
conditions under which job loss among workers in the fast food
industry would be the smallest. Your answer should be framed in
terms of scale effects and substitution effects.
how do firms decide how to hire workers at different wage rates?
how
do firms decide how to hire workers at different wage rates?
Assume the gross wage of w=$10 per hour and gross non-wage income YN = $5000 per...
Assume the gross wage of w=$10 per hour and gross non-wage
income YN = $5000 per year. Assume a maximum of 6,000 hours of
leisure per year (T= 6000 per year ), so that full income for the
worker is $65,000.
Draw the budget constraint under each of the following taxes and
transfer schemes.
1. A progressive tax on earnings where the tax rate is 20% on
earnings up to $50,000 and 30% on earnings above $50,000.
Suppose that the equilibrium wage in the labor market is $8.00 per hour of labor. If...
Suppose that the equilibrium wage in the labor market is $8.00
per hour of labor. If a law increased the minimum wage from $7.25
to $10.00 per hour of labor, then
A. both consumer surplus and producer surplus increase since the
new price is higher.
B. the resulting increase in producer surplus would be larger than
any possible loss of consumer surplus.
C. the resulting increase in producer surplus would be smaller than
any possible loss of consumer surplus.
D....
Factory workers at a company are paid a wage of $15 per hour. In addition, the...
Factory workers at a company are paid
a wage of $15 per hour. In addition, the company pays benefits
(vacation leave, sick leave, health insurance, etc.) equal to 75%
of a worker’s base wage for a 40-hour week. Workers are paid 1.5
times the hourly rate for any overtime hours worked in excess of 40
hours during a week, but no additional benefits are paid for
overtime work.
a) How much wages will a worker
receive for working 40, 42,...
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