ECN 253 Lecture Notes - Lecture 4: Producer Price Index, Gdp Deflator, Unemployment

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greyfox769

27 Sep 2016

School

Marshall University

Department

Economics

Course

ECN 253

Professor

Yuan Yuan( Catherine) Chen

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Document Summary

Organizations of workers that bargain with employers for higher wages and better working conditions. Unions are probably not a significant cause of unemployment in the united states. While they raise the wage, only about 9% of private sector workers are unionized, limiting the effect that unions have on the wider economy. Higher wages result in fewer workers being hired labor unions place upward pressure on the unemployment rate. An above-market wage that a firm pay to increase workers" productivity. Firms want to get the best performance they can out of their workers. Sometime monitoring workers is difficult or costly; an alternative is to pay them a relatively high wage, making them motivated to perform well in order to keep their job. They are probably another reason why unemployment exists even when cyclical unemployment is zero. Price level: a measure of the average goods & services.

Related Questions

1. Critically evaluate each of these statements:

a. "The relative decline of the American Labor movement can be explained by the shift from good-producing to service-providing industries and by the closely related shifts from blue- to white-collar occupations and from male to female employees."

b. "The success of unions in raising their wages relative to nonunion workers has contributed to the decline of unionism."

c. " Unionized firms have tended to become less profitable and, therefore, employers are more resistant to unionization."

2. Comment on each of the following statements:

a. "Unions tie the hands of management and inhibit efficient decision making."

b. "Unions contribute to economic efficiency in that union wage pressure hastens the weeding out of the high-cost, least efficient producers in each industry."

c. "Although unions may reduce wage inequality, to the extent that they reduce wage differentials based on individual merit and effort, the outcome may be rightly perceived as both inequitable and inefficient."

d. "Unions impair the efficiency of our economy indirectly by diminishing profits and thereby reducing investment and economic expansion."

3. Speculate about the reason(s) for each of the following facts about public sector pay:

a. The pay premium received by federal employees declined in the middle and late 1980s.

b. Local governments tend to pay less skilled workers more, and more skilled workers less, than comparably trained and experienced private-sector workers.

c. Female and African-American workers in government receive higher pay on average than their equally qualified counterparts in the private sector.

4. Evaluate this statement: "Profit-maximizing firms lack an incentive to provide job safety, and consequently, the federal government must intervene legislatively to protect workers against the unsafe working conditions that will surely result."

Could you give the solutions to me? I really appreciate your help. Thank you!!

graycrocodile722

Question 1 (1 point) Right-to-work laws in individual states:

make it illegal to require union membership as a condition for continued employment.

were allowed by the Taft-Hartley Act of 1947.

make it illegal to run a "closed shop" in that state.

all of the above.

Question 2 (1 point) In the figure to the right, the wage rate that maximizes the total union member income earned is:

W2.

W1.

W3.

uncertain without more information.

Question 4 (1 point) An example of featherbedding would be:

a union trying to increase worker productivity.

a union trying to increase demand for union labor.

a union trying to increase demand for union-made products.

an act banned by the Taft-Hartley Act.

Question 5 (1 point) The Taft-Hartley Act of 1947 (the Labor Management Relations Act):

is the key legislative act that requires management to bargain with unions.

made certain union practices such as closed-shops illegal.

is the key legislative act that permits unions to organize and to strike.

is perceived by union leaders as the most important legislation enabling unions to improve the wages of their members.

Question 8 (1 point) In order to raise wages above the market level for its workers, a union must:

have monopsony power.

recruit better workers.

have the support of the government.

limit the supply of labor in an industry.

Question 9 (1 point) What are the effects of labor unions on wages and productivity?

Wages are lower for union members than non-union members because union dues are so high.

Productivity increases because the marginal factor cost is equated to the marginal revenue product of labor.

Wages are the same for union members and non-union members.

Productivity does not increase or decrease as the result of unions.

Wages are higher for union members than non-union members.

Productivity may decrease because of the way some collective bargaining rules specify how jobs should be done or productivity may increase due to reduced turnover.

Productivity increases due to reduced turnover or because of the way some collective bargaining rules specify how jobs should be done.

Question 10 (1 point) Under bilateral monopoly, the wage rate is:

indeterminate.

higher than the competitive wage rate.

equal to the competitive wage rate.

lower than the competitive wage rate.

There are two sectors of the construction industry that currently pay their employees the market-clearing wage. The demand for labor in each sector is w = 18 – Ed, where Ed = the number (in thousands) of workers. The supply of labor in each sector is Es = w – 2, where w = the wage rate (dollars per hour). A union organizes in one of the sectors, and it restricts supply to that sector by insisting that only those in the union are hired by firms in that sector (and it is difficult to get into the union). When the employees in this sector unionize, the supply of labor in that sector changes to Es = w – 4.

a) What is the wage rate in both sectors before unionization? How many employees will be hired in each sector?

b) What is the wage rate in the unionized sector? How many employees will be hired in the unionized sector?

c) If the unemployed workers in the newly unionized sector spill over into the nonunion sector, what will be the wage rate in the nonunion sector? How many employees will be hired in that sector?

d) What is the union relative wage advantage (union-wage/nonunion wage)? What is the true absolute effect (union-wage/equilibrium wage in the absence of a union)?

e) Suppose the employees in the non-unionized sector want a union to represent them as well. In an attempt to discourage a union from forming in this sector, the employers in that sector offer a wage rate of $10.50. How many nonunion workers will be hired? What is the union relative wage advantage?

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ECN 253 Lecture Notes - Lecture 4: Producer Price Index, Gdp Deflator, Unemployment

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