Question

3.. The labour market has several special features that distinguish it from other markets. List three of these features stated in the textbook. Select one feature and explain in detail the implication it has for the hiring organization.

4.. Assume you are a sales manager who has to decide whether an additional salesperson should ether to be hired and if so in which of the company's twelve sales districts should that person be employed. Recall that Profit = Revenue - Costs. What economic concept would you use to make your decision? Explain how you would justify your decision to your boss using this concept.

Answer 1

3 . Market in which labors are goods and price ( wages)and quantity of labor is determined is known as labor market. 3 features of labor market are

a) flows in and out of unemployment rate is large as compared to the no. Of unemployed

b)In an active labor market, there are many separations and hires taking place simultaneously.Some firms are doing well and thus hiring more workers, other hiring organizations those are not doing well are laying off workers and few workers are staying unemployed till they find another job.

c) In the medium run, prevails natural rate of unemployment.

4. Sales manager will hire till MR is atleast greater than or equal to MC. If marginal revenue is less than marginal cost of the labor hired then it means it is costing more to the firm than what it is giving back( in the form of output) thus firm will not hire any additional labor in this case. It is profitable for the firm to hire additional labor only when it it producing atleast as much revenue as it is costing the firm.