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Suppose that a union can successfully organize a boycott of products produced by workers in foreign sweatshops. Will this affect the own-wage elasticity of labor demand for union workers? If so, how? Which Hicks-Marshall law applies? Does the boycott affect the substitution effect or the scale effect? Explain.

 

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Romarie Khazandra Marijuan
Romarie Khazandra MarijuanLv10
28 Sep 2019

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Related questions

1. The introduction of a union into a monopsony labor market will cause employment in this market to

A. Rise

B. Fall

C. Remain constant

D. Change in a manner than cannot be determined without additional info.

2. Unions may attempt to increase the demand for union workers by

A. Advocating boycotts of nonunion products

B. Lobbying for trade restrictions

C. Lobbying for laws that restriuct the availability of substitute labor inputs

D. All of the above

E. None of the above

3. As a result of the scale effect associated with a higher wage, the quantity of labor demanded is expected to

A. Fall

B. Rise

C. Remain unchanged

D. Change in an unpredictable manner

4. If a union successfully urges consumers to boycott products produced by nonunion workers, the own-wage elasticity of demand for union labor is reduced

A. Under no circumstances

B. Because the scale effect resulting from a change in the wage will be smaller in magnitude since the boycott lowers the price elasticity of demand for output

C. Because the substitution effect in the labor market resulting from a change in the wage will be smaller in magnitude since the boycott lowers the price elasticity of demand for output

D. Because labor demand falls in response to the boycott

5. union sponsored boycotts of products produced by nonunion workers will affect the elasticity of demand for union workers by affecting the

A. Substitution effect in the labor market

B. Scale effect in the labor market

C. None of the above

6. In a local labor market

A. There are many employers and employees in most local areas

B. Foreign citizens are not allowed to apply for jobs

C. Most employer and employee search is conducted at the national level

D. There are few potential employers and employees in most local areas

7. Economic theory predicts that the cost of general training will be

A. Borne by workers

B. Borne by firms

C. Shared between workers and firms

D. None of the above

8. During a recession, firms are most likely to layoff workers who possess

A. only firm-specific training

B. only general training

9. Productivity is likely to decline by more during a recession for those labor markets in which workers possess a high level of

A. General training

B. Firm-specific training

C. Either general or firm-specific training

D. None of the above

10. Suppose that some previously discouraged workers start looking for work because they become more optimistic about their prospects. The immediate effect of this is expected to be

A. An increase in the unemployment rate

B. A decrease in the unemployment rate

C. An unchanged unemployment rate

D. A reduction in the labor force participation rate

11. The introduction of government-mandated health insurance for all employees would result in a substitution effect that

A. Raises employment and increases the length of the workweek

B. Lowers employment and reduces the length of the workweek

C. Reduces employment and raises the length of the workweek

D. Increases employment and reduced the length of the workweek

12. As the wage rate increases, the quantity of labor demanded will decrease

A. Under no circumstances

B. Only if the substitution effect exceeds the scale effect

C. Only if the scale effect exceeds the substitution effect

D. As a result of both the substitution and scale effects

1. Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be:

A. elastic

B. inelastic

C. unit elastic

2. Which of the following best explains why elasticity varies along a linear demand curve?

A. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage increases.

B. As the quantity of labor demanded rises, the percentage change in quantity demanded rises (for a given change in labor use) as does the percentage change in the wage.

C. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) as does the percentage change in the wage.

D. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage decreases

3. Labor demand is more elastic when:

A. the substitution effect resulting from a wage change is larger

B. the scale effect resulting from a wage change is larger

C. both are correct

D. none of the above

4. The scale effect associated with a change in the wage is larger when:

A. the demand for the final product is more elastic

B. labor costs are a smaller share of total costs

C. there are many close substitutes for this category of labor

D. economics of scale are present in the production of the good

5. The price elasticity of demand for the final products affects the own-wage elasticity of demand for labor by affecting the magnitude of:

A. the substitution effect that occurs in the labor market

B. the scale effect that occurs in the labor market

C. both substitution and scale effects

D. neither substitution nor scale effects

6. Unions are expected to attempt to:

A. make it more difficult to replace labor with other resources

B. reduce the elasticity of demand for the final product

C. support laws that reduce the elasticity of supply of other resources

D. all of the above.

E. none of the above

7. Unions are likely to be less successful in negotiating higher wages in those labor markets in which:

A. the demand for the final product is more elastic

B. there are few close substitutes for union workers

C. the price elasticity of supply for other factors of production is relatively high

D. labor costs comprise a small share of total costs

that this marginal cost arises because each roll of film requires 1 hour of unskilled labor to produce, and the market wage for unskilled labor is $4 per hour. Suppose that this market wage is unaffected by whatever happens in the film industry, and that workers can easily find a job in the other industries at that wage.
(a) If Kodak simply pays its workers their opportunity wage of $4 per hour, then do Kodak workers benefit from, lose from, or remain indifferent to the opening of trade in the film industry?
(b) Now, suppose that Kodak workers are unionized, so that in addition to receiving their opportunity wage they bargain to receive a fraction of the economic rents the company generates. Assume for simplicity that the existence of the union does not affect the firm's output and pricing decisions.5 Will your answer to the question in (a) be different?
(c) Consider the political incentives of Kodak workers to support or oppose free trade in film. Will those political incentives be more closely aligned with the political incentives of management if the workers are unionized or if they are not unionized? Explain.

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