Question

Question #1 : Explain the implications of outsourcing for employment and wages on the domestic and foreign labor markets.

Question #2: What is the purpose of a strike? What are the costs to workers and to management?

Question #3: Explain how the optimal quantity of air pollution is determined.

Answer 1

1.Implications of outsourcing for employment and wages are as below:

Pros:

a. Companies generally decide to outsource the production of goods and services if they think it can save them money and, by doing so, increase company profit

b. Sometimes companies outsource because of the opportunity costs of doing or producing a good or service themselves.

c. Outsourcing can distribute jobs from developed countries to developing countries.

d. Outsourcing can strengthen international ties.

Cons:

e. The drawback to outsourcing that gets the most press is the loss of jobs for country doing the outsourcing.

f. More and more, consumers want to know where their products came from and who made them. Outsourcing makes this kind of transparency difficult.

g. General slippage in the labor and environmental standards that apply to the goods and services.

2. Work stoppage may be initiated by the union, in the form of a strike, or by the employer, in the form of a lockout. A strike need not be a complete stoppage of work and may include labour withdrawals in the form of overtime bans, work slowdowns or rotating strikes.

The purpose and cost of a strike are given below:

a. The purpose of a strike is to compel an employer to agree to terms and conditions of employment, whereas a lockout is intended to exert similar pressure on the employees and the union. The practical result of each, in terms of the impact on the employer’s business, is virtually identical.

b. The employer is likely to lose money due to delayed service to clients or to lost production time. The employees will lose their pay due to the no work, no pay principle. If the strikers are dismissed they will lose their livelihoods altogether.

c. Once the strike is over, even if the business has not been closed down by it, the feelings of hostility resulting from the strike can severely damage teamwork, productivity and profitability.

3. From an economic persepctive the socially optimal level of air pollution is determined when the marginal benefit of the last unit of pollution exactly equals the marginal cost of pollution. At this level the net benefits to society are maximized. If all of the externalities of pollution are accounted for, the resulting level of pollution will be optimal.