BBA2401 Macroeconomics Unit 6 VI complete solutions correct answers key

BBA2401 Macroeconomics Unit 6 VI complete solutions correct answers key

1.      (Market Supply of Labor) The following table shows the hours per week supplied to a particular market by three individuals at various wage rates. Calculate the total hours per week (Q1) supplied to the market.

Hours per Week

Hourly Wage

Q1

Q2

Q3

QT

$15

20

0

0

$16

25

0

0

$17

35

10

0

$18

45

25

10

$19

42

40

30

$20

38

37

45

Why does the quantity supplied tend to increase with the hourly wage? Which individuals, if any, have backward-bending supply curves in the wage range shown? Does the market supply curve bend backward in the wage range shown in the table?

2.      (Substitution and Income Effects) Suppose that the cost of living increases, thereby reducing the purchasing power of your income. If your money wage doesn’t increase, you may work more hours because of the cost-of-living increase. Is this response predominantly an income effect or a substitution effect? Explain.

3.      (Nonwage Determinants of Labor Supply) Suppose that two jobs are exactly the same expect that one if performed in an air-conditioned workplace. How could you measure the value workers attach to such a job amenity?

4.      (Why Wages Differ) Why might permanent wage difference occur between different markets for labor or within the same labor market?

5.      (Craft and Industrial Unions) Both industrial unions and craft unions attempt to raise their members’ wages, but each goes about it differently. Explain the difference in approaches and describe the impact these differences have on excess quantity of labor supplied.

6.      (Union Objectives) What other objectives besides higher wages do unions pursue?

7.      (Union Strategies) What strategies do unions employ to achieve their wage objectives?

8.      (Unionization Rates) What trends have worked against the union movement during the last half century? What has happened to the effectives of strikes and why?

9.     (The Strike) Why might firms in industries with high fixed costs be inclined to prevent strikes or end strikes quickly?

10.  (Industrial Unions) Why are unions more effective at raising wages in oligopolistic industries than in competitive industries?