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3 Jul 2018

Question 1

If the wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by how many percentage?

Question 2

If the quantity of auto workers demanded decreases from 66000 to 54000 when the equilibrium wage increases from $12 per hour to $14 per hour, then the wage elasticity of demand for these workers is elastic or inelastic?

Question 3

if the absolute elasticity of labor demand is 2.0, then an eight percent increase in the wage will decrease employment by how many percentage?

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Patrina SchowalterLv2

6 Jul 2018

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Related questions

A small province has a minimum wage of $12 per hour and the quantity demanded of minimum wage work or employment is 20 million hours. It proposes to increase the minimum wage by 25% to $15 per hour and you have estimated that the price elasticity of demand for minimum wage workers is -1.10. (For all the questions below show your caculations.)

a.What are the total wages paid to minimum wage workers before the increase? (Total wages paid = wage rate x number of hours worked) (or essentially: Revenue = P x Q)

b.What will be the percent change in the quantity demanded of minimum wage work if the minimum wage is increased by 25%?

c.What will be the number of hours of employment for minimum wage workers if the minimum wage is increased?

d.What will be the total wages paid to minimum wage workers after the increase in the minimum wage rate? (Total wages = wage rate x number of hours worked)

e.Would the proposalâs expected negative outcome for minimum wage workers (reduced earnings) be a concern if the price elasticity of demand were 0.65? Explain in a few words.

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

browncoyote590

Consider the market for labor depicted by the demand and supply curves that follow.

Complete the following table with the quantity of labour supplied and demanded if the wage is set at $15.00. Then indicate whether this wage will result in a shortage or a surplus.

Wage Labor Demanded Labor Supplied Shortage or surplus

(Dollars per hour) (Thousands of workers) (Thousands of workers)

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.

Which of the following statements are true? Check all that apply.

1. In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium.

2. In this labour market, a minimum wage of $11.50 would be binding.

3. If the minimum wage is set at $15, the market will not reach equilibrium.

4. Binding minimum wages cause structural unemployment.