Questions from Labor Economics

Q: Suppose there are two inputs in the production function, labor and

Suppose there are two inputs in the production function, labor and capital, and these two inputs are perfect substitutes. The existing technology permits one machine to do the work of three workers. T...

Q: Suppose the hourly wage is $10 and the price of each

Suppose the hourly wage is $10 and the price of each unit of capital is $25. The price of output is constant at $50 per unit. The production function is f(E,K) = E½K ½, so that the marginal product o...

Q: Several states set their own minimum hourly wage above the federal minimum

Several states set their own minimum hourly wage above the federal minimum wage. To offset higher minimum wages, many of these states offer firms tax incentives that lower the cost of borrowing and/or...

Q: How does the amount of unemployment created by an increase in the

How does the amount of unemployment created by an increase in the minimum wage depend on the elasticity of labor demand? Do you think an increase in the minimum wage will have a greater unemployment e...

Q: Which one of Marshall’s rules suggests why labor demand should be relatively

Which one of Marshall’s rules suggests why labor demand should be relatively inelastic for public school teachers and nurses? Explain.

Q: Draw on a single graph the time to transition to a new

Draw on a single graph the time to transition to a new labor equilibrium when a firm faces variable adjustment costs for the following two firms. a. A trucking firm currently employs 100 drivers. If t...

Q: Consider a production model with two inputs—domestic labor (EDom

Consider a production model with two inputs—domestic labor (EDom) and foreign labor (EFor). The market is originally in equilibrium in that Then a wage shock occurs to cause a subs...

Q: Figure 3-18 in the text shows the ratio of the

Figure 3-18 in the text shows the ratio of the federal minimum wage to the average hourly manufacturing wage. Figure 3-18: a. Describe how this ratio has changed from the 1950s to the 1990s. What mi...

Q: Union A wants to represent workers in a firm that would hire

Union A wants to represent workers in a firm that would hire 20,000 workers if the wage rate is $12 and would hire 10,000 workers if the wage rate is $15. Union B wants to represent workers in a firm...

Q: Consider a firm for which production depends on two normal inputs,

Consider a firm for which production depends on two normal inputs, labor and capital, with prices w and r, respectively. Initially the firm faces market prices of w = 6 and r = 4. These prices then sh...