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In making labour supply decisions, households weigh:

a. The market wage against the value of market-produced goods.

b. The market wage against the value of their marginal product of labour.

c. The market wage against the value of leisure and time spent in unpaid household production.

d. Child care costs.

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Mahe Alam
Mahe AlamLv10
1 Jan 2021
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Related questions

Worker 1 with non-labour income Y facing a wage offer w and a utility function defined over consumption and leisure:

U(c,l) = lnC + 4lnl

1) Compare worker 1 with worker 2 whose utility function is described by U(c,l) = cl.

Which worker places a higher value on labour market work?

2) Suppose the worker participates in the labour market. Derive workerā€™s compensated labor supply function and the compensated labour supply elasticity with respect to wage as a function of utility level and wage.

3) Derive workerā€™s uncompensated labour supply function (for labour market participants and non-participants) and the uncompensated labour supply elasticity (for labor market participants) with respect to wage as a function of non-labour income and wage.

4) Derive workerā€™s income elasticity. Is leisure a normal or inferior good for this worker?

5) Provide the functional form of the income effect from a marginal decrease in income.

6) Provide the functional form of the substitution and total income effects of a marginal increase in wage.

7) Show that the Slutsky equation holds for this worker.

11. In your later studies in economics, you will Supply Curve of Labour learn that supply curves for labour can be "backward bending" (that is, can be negatively sloped if a rise in the wage rate leads workers to want to work less in order to take more vacations and more leisure time). Such a supply curve is represented at the right, where w is the wage rate per hour and L is the number of hours of labour. The demand curve for labour (representing the number of hours of labour demanded by firms which hire these workers) can be assumed to be downward sloping, as usual in this course. Which of the following statements about the stability of this situation is (are) generally true? 1) This labour market will be stable if the demand curve is flatter than the supply curve. In This labour market is inherently unstable. III) This labour market will be stable if a rise in wages Icads to excess supply of hours of work. A) only! B) only II C) only III DI & II (E) & III F) II & III G) I, II & III ) none of the three L

17. All of the following can raise union member wages except:

a. limiting union membership over time

b. increasing the demand for non-union made goods

c. increasing the productivity of union workers

d. increasing the demand for union-made goods

Ā 

12. If a firm wants to maximize its profits, it should

a. equates the marginal revenue product for each input to the price of the input

b.hire unskilled labour rather than skilled labour since unskilled labour is cheaper

c. hire lots of capital and very little labour since labour needs to be trained

d. equate the marginal physical product for each input to the price of the input

Ā 

10. A profit-maximizing monopolist will hire labour up to the point where

a. marginal revenue equals than the wage rate.

b. marginal revenue product is greater than the wage rate.

c. marginal revenue equals the price of the product.

d. marginal revenue product is less than the wage rate.

Ā 

9. The practice of outsourcing has been given a boost by:

a. firms that are becoming more risk-averse.

b. advances in telecommunications and computer networking.

c. support from organized labour.

d.sharp increases in the cost of overseas labour.

Ā 

8. Suppose firms in an industry hire unskilled labour and skilled labour. unskilled labour is a substitute for capital and skilled labour is a complement with capital. A decrease in the real price of capital would:

a. cause the demand for unskilled labour to increase and the demand for skilled labour to decrease. the wage of unskilled labour would rise relative to the wage of skilled labour

b. cause the demand for both kinds of labour to decrease. wages rates of both kinds of labour would decrease too.

c. cause the demand for labour to increase, raising wages of both skilled and unskilled labour.

d. cause the demand for unskilled labour to decrease and the demand for skilled labour to increase. the wage of unskilled labour would decrease relative to the wage of skilled labour.

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