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Homework Help, Chap 17

by: alicekhanh

Homework Help, Chap 17 Econ 121

Marketplace > Santa Ana College > Economcs > Econ 121 > Homework Help Chap 17
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Help for Chapter 17
Gus Montes
Class Notes
Microeconomic, Econ, homework help
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This 5 page Class Notes was uploaded by alicekhanh on Thursday August 11, 2016. The Class Notes belongs to Econ 121 at Santa Ana College taught by Gus Montes in Spring 2016. Since its upload, it has received 13 views. For similar materials see Microeconomics in Economcs at Santa Ana College.

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Date Created: 08/11/16
1. Why are social and political forces more active in the labor market than in  most other markets? Because market forces alone cannot explain the differences in wages or  unemployment. 2. How is opportunity cost related to the supply of labor? The opportunity cost of working one more hour is the loss of one hour  spent on nonmarket activities. This means that the quantity of labor  supplied would decrease if the value of nonmarket activities increased. 3. If the wage goes up 20 percent and the quantity of labor supplied increases  by 5 percent, what’s the elasticity of labor supply? 0.25 4. List four factors that contribute to the elasticity of labor demand. The relative importance of labor in the production process. The elasticity of demand for the firm’s good. The degree to which marginal productivity falls with an increase in labor. The possibility, and cost, of substitution in production. 5. List four shift factors of demand and their effect on demand. Market structure. The more the market is monopolistic, the lower the  demand for labor. Shifts in demand for the good. An increase in the demand for a good  shifts the demand for labor to the right. The cost of competing factors of production. A rise in the cost of  competing factors shifts the demand for labor to the right. The development of new technology. The effect is ambiguous. Other  things equal, the demand for workers who do not know the technology  will shift to the left. Other things are often not equal. To the extent that  the new technology requires building new machinery or leads to great  consumer demand, labor demand might increase. 6. The town of Oberlin, Ohio, has one hospital. How would you classify this  market structure, and what effect will this market structure likely have on  wages of nurses in Oberlin compared to a perfectly competitive market  structure? Demonstrate your answer graphically. In Oberlin, the market structure for hospitals is most like a monopsony. As compared to perfect competition, Oberlin Hospital will  hire fewer nurses at a lower wage rate 7.  A recent study by the International Labor Organization estimates that 250  million children in developing countries between the ages of 5 and 14 are  working either full or part time. The estimates of the percentage of children  working within particular countries is as high as 42 percent in Kenya.  Among the reasons cited for the rise in child labor are population increases  and poverty. a. Why do firms hire children as workers? Firms hire children because children’s marginal productivity relative to their wage is higher than it is for alternative workers.  b. Why do children work? For the same reasons that others work—they and their families need  money and work is what is expected of them.  c. What considerations should be taken into account by countries when  deciding whether to implement an international ban on trade for products  made with child labor? One must look at the effects of that ban. If the ban will lead to children  starving, the ban does them no good; if it allows them to go to school  while the firm hires their parents instead, the ban may help the  children. 8. a. List three types of demand discrimination. Discrimination based on group characteristics. Discrimination based on irrelevant individual characteristics. Discrimination based on relevant individual characteristics. b. Which is the most difficult to eliminate? Why? Discrimination based on relevant individual characteristics is most  difficult to eliminate because this kind of discrimination lowers costs of  production and makes a firm more competitive.  c. Which is the easiest to eliminate? Why? Discrimination based on irrelevant individual characteristics because  this kind of discrimination has no economic motivation. 9. Which type of discrimination is easier to address legally—demand side or  institutional? Explain your answer. Demand side because firm behavior is easier to monitor and, socially,  people tend to favor laws regulating firms when they are  discriminatory.  10.A study in 2005 reported that the average male CEO of Fortune 500 firms is  6 feet, about 2.5 inches more than the average male. Why might this be  difficult to eliminate through laws that restrict companies from hiring based  on height? Because this is an example of discrimination based on relevant  individual characteristics, a firm has an economic incentive to  discriminate. 11.According to a study by economists Muriel Niederle and Lise Vesterlund,  women are less willing to participate in competitive environments. a. What is the potential impact on the number of women in high­level  management positions? There are fewer women in high­level management positions because  these positions are often highly competitive. b. If this were the cause of fewer women working in high­level management, would you characterize it as discrimination? If so, what type? If not, why  not? This may or may not be discrimination. It may be institutional  discrimination if women are socialized to prefer less competition, but if  women are genetically predisposed to compete less, then it may not be  discrimination.  12.Comparable worth laws require employers to pay the same wage scale to  workers who do comparable work or have comparable training. What likely  effect would these laws have on the labor market? These laws would likely politicize the labor market much more than it is currently politicized. It would involve an enormous increase in  government involvement and regulation of pay.  13.What has happened to union membership in the United States since the  1960s? Union membership has decreased 14. a. What is the difference between a union shop and a closed shop? Closed shops are firms where the union controls the hiring. In a union  shop, all workers must join the union.  b. Which did the Taft­Hartley Act make illegal? Closed shops.  c. How have more recent laws changed the role of unions? New federal rules strengthened unions by limiting an employer’s ability  to slow worker elections to establish a union. 


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