Problem Set 5 - Labor Demand - III (Chapter 4) March 8,...

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Unformatted text preview: Labor Demand - III (Chapter 4) March 8, 2010 1. 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 that would hire 30 , 000 workers if the wage rate is $20 and would hire 33 , 000 workers if the wage rate is $15. (a) Which union faces a more elastic demand curve? (b) Which union will be more successful in increasing the total income (wages times person hours) of its membership? 2. Suppose a purchases labor in a competitive labor market and sells its product in a competitive product market. The firms elasticity of demand for labor is- . 4. Suppose the wage increases by 5%. (a) What will happen to the number of workers hired by the firm? (b) What will happen to the marginal productivity of the last worker hired by the firm? 3. In a particular industry, labor supply is E s = 10+ w and labor demand is E d = 40- 4 w , where E is the level of employment and...
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This note was uploaded on 05/12/2010 for the course ECON 320 taught by Professor Shin during the Winter '08 term at University of Michigan.

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Problem Set 5 - Labor Demand - III (Chapter 4) March 8,...

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