Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971509
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 6CQQ
To determine
Concept based on theory of efficiency wages.
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According to the theory of efficiency wages,a. firms may find it profitable to pay above-equilibrium wages.b. an excess supply of labor puts downward pressure on wages.c. sectoral shifts are the main source of frictional unemployment.d. right-to-work laws reduce the bargaining power of unions
Give two reasons why a firm might want to pay workers above the competitive wage and how can this lead to unemployment?
In the figure above, if a minimum wage of $6 per hour has been imposed and the labor demand curve then shifts from Do to D1 the wage rate
and the amount of
employment
A.falls; decreases
B.does not change; increases
C.does not change; decreases Pay attention that word above is "employment," not"unemployment"
D) falls, increases
Chapter 15 Solutions
Principles of Macroeconomics (MindTap Course List)
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PA
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- In the market for labor ______ purchase labor from ________. Firms, individuals Individuals, firms Unions, individuals Monopsonies, firmsarrow_forwardAn efficiency wage is A. an above-market wage paid by a firm to maximize worker productivity and reduce turnover that raises the level of structural unemployment. B. an above-market wage paid by a firm to maximize the output of the firm that increases the level of structural unemployment. C. a below-market wage paid by a firm to maximize firm profits and reduce turnover that reduces the natural rate of unemployment. D. an above-market wage paid by a firm to maximize worker productivity and reduce turnover that reduces the level of structural unemployment. E. equal to the market-clearing wage, so that social welfare is maximized while maintaining the level of frictional unemployment.arrow_forwardTake me to the text In an effort to increase business in 2016, Nir-Van-A (a company that provides van rentals) decided to discount its prices. Following is financial information from 2015 and 2016. Note that minimum wage for service workers has increased in 2016. Calculate the labour cost margin for each year. Do not enter dollar signs or commas in the input box. Round your answers to 2 decimal places. Item 2016 $1,008,000 $747,000 Revenue Payroll and Related Expenses Labour Cost Margin 1.34 2015 % 1,37 $951,000 $690,000 %arrow_forward
- QUESTION FOUR a) In words, explain the difference between real and nominal wages. b) Discuss the relationship between slope and elasticity of labour demand curve.c) Suppose a firm purchases labour in a competitive labour market and sells its product in a competitive product market. The firm’s elasticity of demand for labour is 0.4. Suppose further that the wage increases by 5 percent. What will happen to the amount of labour hired by the firm?arrow_forwardAs more people from the baby boom generation retire this will cause _____ (no change in/rise/fall) in labor supply. As more people from gen Z graduate from highschool and college and enter the work force this will cause _____ (increase/decrease/no change) We can expect wages to _____ (fall/rise/stay the same)arrow_forwardWhen is an employer forced to keep the labor cost low? A. When the product demand is inelastic. B. When the employer is in a competitive product market. C. When the rate of unemployment is low. D. When certain skills are essential for production.arrow_forward
- In the model of a competitive labor market, an increase in the wage, ceteris paribus, causes A. an increase in the quantity demanded of labor B. the MRP curve to shift to the left c. a decrease in the quantity demanded of labor D. the MRP curve shifts to the rightarrow_forwardexplain the relationship between: the unemployment rate and minimum wage. the unemployment rate and activities of trade unions. the unemployment rate and the efficiency wage theoryarrow_forwardWhen economists say that the demand for labor is a derived demand, they mean that it is... A. dependent on government expenditures for public goods and services B. related to the demand for the product or service labor is producing C. based on the desire of businesses to exploit labor by paying below equilibrium wage rates D. based on the assumption that workers are trying to maximize their money incomes.arrow_forward
- Figure 15-12 Price level LRAS, LRAS₂ B * $10 104 100 Thr AD₁ 11 11.3 SRAS, SRAS₂ AD₂ Real GDP Refer to Figure 15-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point Barrow_forwardPlease answer the c and d. Suppose that labour demand and labour supply are represented by the equations: Demand: LD = 10 - 0.5W Supply: LS = 0.5W a. Find the equilibrium wage and employment levels. b. Graph the curves and indicate the equilibrium on a graph. c. Suppose hiring is done through a labour union in this market which has limited hiring to 4 workers. What will be the wage in this market? d. Give one factor which causes labour demand to increase and one factor which causes labour supply to increase.arrow_forwardPart a. What is the marginal physical product(MPP) of the third unit of labor hired? Part b. What is the marginal revenue product(MRP) of the fourth unit of labor hired? Part c. If the labor market equilibrium wage(W*) were $9 per hour, how many workers would a firm wish to hire? Why?arrow_forward
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