Show the effects of the increase in the wage

Reference no: EM131134468

Product Elasticities and the Wage Job Trade-Off. Consider two unions, one in an industry where the price elasticity of demand for the product is3.0 (industry E), and one where the price elasticity of demand is 2.0 (industry I). In both industries, the initial wage is $30 and labor is responsible for half the cost of production, so the percentage change in the product price is half the percentage change in the wage. In each industry, the initial employment is 100 workers. Suppose each union increases its wage by 10 percent.

a. Compute the output effect of the wage increase for each industry: Total employment in industry E drops from 100 to__________ ; total employment in industry I drops from 100 to_________ .

b. Assume that there is no substitution effect from changes in wages. Use two graphs to show the effects of the increase in the wage on the quantity of labor demanded.

Reference no: EM131134468

Questions Cloud

How much would the economys money supply increase : If First National decides to loan out its excess reserves, by how much would the economy's money supply increase? Provide an overview of the scenario. Identify key Issues or problems that may exist.

Attitudes toward marriage refer to the same sample data : Attitudes Toward Marriage In a Time>CNN survey, 24% of 205 single women said that they "definitely want to get married." In the same survey, 27% of 260 single men gave that same response.

Are historical american stories myths or legends : Are historical American stories myths, legends, fairy tales, or something else?- What, if anything, about these accounts is literally true?

Deweese corporation had of common stock outstanding : The company issued 40,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year.

Show the effects of the increase in the wage : Assume that there is no substitution effect from changes in wages. Use two graphs to show the effects of the increase in the wage on the quantity of labor demanded.

Find amount that will accumulate if it is left for ten years : After placing $8,000 in a savings account paying annual compound interest of 7%, calculate the amount that will accumulate if it is left for 10 years?

How much will the quantity of labor demanded increase : Suppose the union s objective is to maximize total labor income. What is the income-maximizing wage and quantity of labor demanded?

How a misinterpreted belief in karma become driving force : Explain how you think a misconstrued/ misinterpreted belief in karma could become the driving force for the caste system in ancient India?

Existing dataset to compute a factorial anova : Use an existing dataset to compute a factorial ANOVA. All SPSS output should be pasted into your document. The "Activity 5a.sav" file contains a dataset of a researcher interested in finding the best way to educate elementary age children in mathe..

User Account

All Pages