1. In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the following table. Labor Total Physical Hourly Wage Total Wage Marginal Factor Supplied Product Rate ($) Cost Cost 10 100100 55 11 109109 66 12 117117 77 13 124124 88 14 130130 99 15 135135 1010 nothing minus nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing a. Derive, at each level of labor supplied, the firm's total wage costs. (Enter numeric responses in the table above using real numbers.) b. Derive, at each level of labor supplied, the firm's marginal factor cost. 2. Recently, the Writers Guild of America (WGA), which represents TV and film screenwriters, called for a strike, and most screenwriters stopped working. Nevertheless, writers for certain TV soap operas, such as The Young and the Restless, which have had shrinking audiences for years, draw small numbers of viewers for repeat shows long dash and rarely sell on DVDs long dash opted to drop their WGA memberships. They continued working during the strike. The WGA posted on its Web site a phone number for union members to report "strike-breaking activities and 'scab writing ' " to the union's 12-person Strike Rules Compliance Committee because A. strikebreakers solidify union members by giving them moral support. B. strikebreaking is against the law and the WGA was only performing its civic duty. C. strikebreakers diminish the collective bargaining power of a union by replacing union employees. D. strikebreakers increase the collective bargaining power of a union by adding new employees. 3. A firm hires labor in a perfectly competitive labor market. Its current profit-maximizing hourly output is 100 units, which the firm sells at a price of $1010 per unit. The marginal physical product of the last unit of labor employed is 5 units per hour. The firm pays each worker an hourly wage of $2020. a. What marginal revenue does the firm earn from sale of the output produced by the last worker employed? $ nothing. (Enter a numeric response using an integer.) b. Does this firm sell its output in a perfectly competitive market? No Yes . 3. A government may seek to limit the power of a union because A. union regulations may force some corporations to move overseas. B. unions may raise the workers' wages high enough to eliminate all corporate profit. C. labor strikes, especially those affecting several industries, have an adverse effect on the economy. D. labor unions are politically powerful enough to overthrow a government. 4. The following table gives final product price elasticity data for four industries. Industry A B C D Price Elasticity of Demand 0.20.2 0.30.3 0.60.6 0.90.9 Other things equal, the greatest elasticity of demand for labor will be in industry A. C. B. B. C. A. D. D. 5. A monopolist will employ ________ workers than a perfectly competitive industry because for a monopolist, marginal revenue is _____ price. A. more; equal to B. fewer; less than C. more; less than D. more; more than E. fewer; more than 6 .Explain the impact of each of the following events on the market for union labor. a. Union-produced TV and radio commercials convince consumers to buy domestically manufactured clothing instead of imported clothing. A. The demand for union workers will fall, increasing union wages but decreasing union employment. B. The demand for union workers will rise, increasing union wages and employment. C. The supply of union workers will rise, decreasing union wages and increasing union employment. D. The supply of union workers will fall, increasing union wages and decreasing union employment. b. The union sponsors periodic training programs that instruct union laborers about the most efficient use of machinery and tools. A. The supply of union workers will fall, increasing union wages and decreasing union employment. B. The supply of union workers will rise, decreasing union wages and increasing union employment. C. The demand for union workers will fall, increasing union wages but decreasing union employment. D.The demand for union workers will rise, increasing union wages and employment. 7. The price elasticity of demand for an input A. is lower the greater the price elasticity of demand for the final product. B. is lower as more substitutes for the input are available. C. is lower the larger the proportion of total costs accounted for by that input. D. is larger the longer the time period being considered. When U.S. firms are the home firms engaging in labor outsourcing, the effects are ________ wages and ________ employment in the relevant U.S. labor markets. A. higher; increased B. lower; increased C. lower; decreased D. higher; decreased 1211. In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the following table. Labor Supplied Total Physical Product Hourly Wage Rate ($) Total Wage Cost Marginal Factor Cost 10 100100 55 nothing minus 11 109109 66 nothing nothing 12 117117 77 nothing nothing 13 124124 88 nothing nothing 14 130130 99 nothing nothing 15 135135 1010 nothing nothing a. Derive, at each level of labor supplied, the firm's total wage costs. (Enter numeric responses in the table above using real numbers.) b. Derive, at each level of labor supplied, the firm's marginal factor cost. 2. Recently, the Writers Guild of America (WGA), which represents TV and film screenwriters, called for a strike, and most screenwriters stopped working. Nevertheless, writers for certain TV soap operas, such as The Young and the Restless, which have had shrinking audiences for years, draw small numbers of viewers for repeat shows long dash and rarely sell on DVDs long dash opted to drop their WGA memberships. They continued working during the strike. The WGA posted on its Web site a phone number for union members to report "strike-breaking activities and 'scab writing ' " to the union's 12-person Strike Rules Compliance Committee because A. strikebreakers solidify union members by giving them moral support. B. strikebreaking is against the law and the WGA was only performing its civic duty. C. strikebreakers diminish the collective bargaining power of a union by replacing union employees. D. strikebreakers increase the collective bargaining power of a union by adding new employees. 3. A firm hires labor in a perfectly competitive labor market. Its current profitmaximizing hourly output is 100 units, which the firm sells at a price of $1010 per unit. The marginal physical product of the last unit of labor employed is 5 units per hour. The firm pays each worker an hourly wage of $2020. a. What marginal revenue does the firm earn from sale of the output produced by the last worker employed? $nothing. (Enter a numeric response using an integer.) b. Does this firm sell its output in a perfectly competitive market? No Yes . 3. A government may seek to limit the power of a union because A. union regulations may force some corporations to move overseas. B. unions may raise the workers' wages high enough to eliminate all corporate profit. C. labor strikes, especially those affecting several industries, have an adverse effect on the economy. D. labor unions are politically powerful enough to overthrow a government. 4. The following table gives final product price elasticity data for four industries. Industry A B C D Price Elasticity of Demand 0.20.2 0.30.3 0.60.6 0.90.9 Other things equal, the greatest elasticity of demand for labor will be in industry A. C. B. B. C. A. D. D. 5. A monopolist will employ ________ workers than a perfectly competitive industry because for a monopolist, marginal revenue is _____ price. A. more; equal to B. fewer; less than C. more; less than D. more; more than E. fewer; more than 6 .Explain the impact of each of the following events on the market for union labor. a. Union-produced TV and radio commercials convince consumers to buy domestically manufactured clothing instead of imported clothing. A. The demand for union workers will fall, increasing union wages but decreasing union employment. B. The demand for union workers will rise, increasing union wages and employment. C. The supply of union workers will rise, decreasing union wages and increasing union employment. D. The supply of union workers will fall, increasing union wages and decreasing union employment. b. The union sponsors periodic training programs that instruct union laborers about the most efficient use of machinery and tools. A. The supply of union workers will fall, increasing union wages and decreasing union employment. B. The supply of union workers will rise, decreasing union wages and increasing union employment. C. The demand for union workers will fall, increasing union wages but decreasing union employment. D.The demand for union workers will rise, increasing union wages and employment. 7. The price elasticity of demand for an input A. is lower the greater the price elasticity of demand for the final product. B. is lower as more substitutes for the input are available. C. is lower the larger the proportion of total costs accounted for by that input. D. is larger the longer the time period being considered. When U.S. firms are the home firms engaging in labor outsourcing, the effects are ________ wages and ________ employment in the relevant U.S. labor markets. A. higher; increased B. lower; increased C. lower; decreased D. higher; decreased 10.The monopolist hires fewer workers than the perfect competitor because A. the MRP curve for the monopolist is above the MRP curve of the perfect competitor. B. product price must rise for the monopolist to sell more. C. the monopolist produces less than the perfect competitor and needs less labor, other things being equal. D. None of the above. The monopolist hires fewer workers than the perfect competitor because A. the MRP curve for the monopolist is above the MRP curve of the perfect competitor. B. product price must rise for the monopolist to sell more. C. the monopolist produces less than the perfect competitor and needs less labor, other things being equal. D. None of the above. Labor Input Marginal Physical Product Marginal Revenue (workers per week) (output per week) (dollars per week) 25 100100 6.006.00 26 9090 5.505.50 27 8080 5.005.00 28 7070 4.504.50 29 6060 4.004.00 How many workers will this firm employ if the weekly wage is $240240? A. 0 B. 27 C. 28 D. 29 12For a firm facing a perfectly elastic supply of labor, the employment of workers will continue until A. MPP = MR. B. marginal factor cost = wage rate. C. MRP = wage rate. D. All of the above. 13. Under bilateral monopoly, the wage rate is A. lower than the competitive wage rate. B. indeterminate. C. equal to the competitive wage rate. D. higher than the competitive wage rate. 14. Explain what happens to the elasticity of demand for labor in a given industry after each of the following events. a. A new manufacturing technique makes capital easier to substitute for labor. The elasticity of demand for labor becomes more elastic . b. There is an increase in the number of substitutes for the final product that labor produces. The elasticity of demand for labor becomes less elastic . c. After a drop in the prices of capital inputs, labor accounts for a larger portion of a firm's factor costs. The elasticity of demand for labor becomes more elastic . 15. Currently in the United States, A. union membership is increasing. B. the AFL-CIO remains the predominant labor union. C. the largest unions primarily represent service industries and government. D. deregulation of some industries has increased union power. E. All of the above answers are true. 16. The contribution to total revenues coming from the next worker hired is A. marginal product. B. total product. C. marginal revenue product. D. total revenues. 17. The current market wage rate is $1010, the rental rate of land is $100100 per unit, and the rental rate of capital is $400400. Production managers at the firm find that under their current allocation of factors of production, the marginal revenue product of labor is $200200, the marginal revenue product of land is $2 comma 0002,000, and the marginal revenue product of capital is $2 comma 0002,000. Is the firm maximizing profit? A. No. The marginal revenue product of each input is not equal. B. No. The marginal factor cost of each input is not equal. C. No. The marginal revenue product per dollar spent on each input is not equal. D. Yes. The firm is maximizing profits. 18. Issues and Applications, Are Unions in a Sizzle to Organize Burger Flippers? LOADING... The single biggest attraction for unions considering organizing fast food workers is A. that they have steady pay checks and can pay union dues. B. becoming a collective bargaining agent for more than 4 million new full-time members would constitute a significant boost. C. that they could offer an alternative to becoming a collective bargaining agent. D. most of them are young. 19. As compared to an industry that is perfectly competitive in both input and output markets, a bilateral monopolist will A. offer lower wages, but the effect on employment is indeterminate. B. offer higher wages and employ more workers. C. offer lower wages and employ fewer workers. D. employ fewer workers, but the effect on wages is indeterminate. 20. A socially desirable aspect of collective bargaining is to A. declare secondary boycotts. B. have jurisdictional disputes. C. announce sympathy strikes. D. resolve member grievances. When viewing unions as monopoly sellers of a service, the goals the unions may pursue include all of the following except 21. A. maximizing profits for the employers of union members. B. maximizing gross income for its members. C. maximizing wage rates for certain workers. D. employment for all union members. 22. Workers 10 11 12 13 14 15 MPP 2424 2020 1616 1212 88 44 A perfectly competitive firm faces the marginal product schedule shown above. The price of the product is $2525 and the wage rate is $320 per worker. The marginal revenue product of the 14th worker is A. $2525. B. $200200. C. $320. D. $300300. 23. The following table depicts the product market and labor market a digital device manufacturer faces. Labor Input (workers per day) 10 Total Physical Product 100100 Marginal Physical Product - Product Price ($) 11 111111 1111 4949 12 120120 99 4848 13 127127 77 4747 14 132132 55 4646 15 135135 33 4545 5050 Total Revenue nothing Marginal Revenue Product - nothing nothing nothing nothing nothing nothing nothing nothing nothing a. Calculate total revenue at each input level above 10 units. (Enter numeric responses in the table above using real numbers.) b. Calculate marginal revenue product at each input level above 10 units. nothing 24. A profit maximizing firm will hire inputs in combinations A. that equate marginal physical products of each input. B. that equate marginal revenue products of each input. C. that minimize the prices of inputs. D. such that the marginal physical product per last dollar spent on each factor of production is equalized. 25. Which of the following is not a key factor that influences the elasticity of demand for labor? A. How easy it is to substitute other inputs for labor in the production process. B. The length of time the firm has to adjust to a change in the labor's price. C. The proportion of total costs that is accounted for by labor. D. The price elasticity of demand for the final product. E. The availability of labor in the market. The MRP curve of the monopolist is A. never less elastic than the MRP curve of the perfect competitor. B. always more unit elastic than the MRP curve of the perfect competitor. C. always less elastic than the MRP curve of the perfect competitor. D. None of the above. 27.When MFC < MRP, a firm in a competitive market will A. hire more workers. B. layoff workers. C. earn fewer profits. D. stop hiring. 28. If a firm is a perfectly competitive purchaser of factor inputs and the wage rate is $5, the marginal factor cost for labor is A. indeterminate. B. greater than $5. C. less than $5. D. $5. 29. Issues and Applications, Are Unions in a Sizzle to Organize Burger Flippers? LOADING... The Service Employees International Union is the only union that has so far expressed any interest in attempting to organize fast food workers because A. low wages that workers earn imply relatively small payoffs to unions that might organize handfuls of restaurant chains. B. most of the 200,000 fast food restaurants in the United States are franchises with individual owners. C. most fast food workers traditionally do not remain in their jobs for very long, and their hourly earnings average only about $1.50 above the minimum wage. D. All of the above. 30. A sympathy strike is a work stoppage by a union resulting from the union feeling bad about its members' unfair wages. A. True B. False A business enterprise that may hire nonunion members, conditional on their joining the union by some specified date after employment begins, best describes A. a union shop. B. a right-to-work enterprise. C. a closed shop. D. an industrial union. 31. At present, less than 7 percent of workers in the private sector in the United States belong to unions. A. True B. False Which of the following is not an explanation for the decline in union membership in the United States since the 1960s? A. an increase in the number of federal employees B. deregulation of certain industries C. an increase in immigration D. a decline in manufacturing employment 32 A profit-maximizing monopolist hires workers in a perfectly competitive labor market. Employing the last worker increased the firm's total weekly output from 110 units to 111 units and caused the firm's weekly revenues to rise from $25 comma 25025,250 to $25 comma 87525,875. What is the current prevailing weekly wage rate in the labor market? $ nothing. (Enter a numeric response using an integer.) The marginal factor cost curve is ________ whenever the supply curve is upward sloping. A. below the supply curve B. the same as the supply curve C. above the supply curve D. nonexistent An example of featherbedding would be A. a union trying to increase demand for union-made products. B. an act banned by the Taft-Hartley Act. C. a union trying to increase demand for union labor. D. a union trying to increase worker productivity. The Taft-Hartley Act of 1947 (the Labor Management Relations Act) A. made certain union practices such as closed-shops illegal. B. is the key legislative act that permits unions to organize and to strike. C. is the key legislative act that requires management to bargain with unions. D. is perceived by union leaders as the most important legislation enabling unions to improve the wages of their members. The Taft-Hartley Act of 1947 (the Labor Management Relations Act) A. made certain union practices such as closed-shops illegal. B. is the key legislative act that permits unions to organize and to strike. C. is the key legislative act that requires management to bargain with unions. D. is perceived by union leaders as the most important legislation enabling unions to improve the wages of their members. Explain why the short-term effects of outsourcing on U.S. wages and employment tend to be more ambiguous than the long-term effects. A. In the short run, outsourcing has little effect because it takes time for employers in the U.S. move to production abroad. In the long run, wages and employment in the U.S. decrease as production is fully moved to foreign countries. B. In the short run, the effects of outsourcing depend on whether it's done by U.S. or foreign firms. In the long run, wages and employment in the U.S. increase as countries specialize in producing things at which they're most efficient. C. In the short run, the effects of outsourcing depend on the ability of U.S. workers to find new jobs. In the long run, wages and employment in the U.S. decrease as consumers buy the products made abroad. D. None of the above. The following table shows the relationship between the quantity of workers supplied and the wage rate for a monopsonist. Find the total wage bill and the marginal factor cost (MFC). Labor Supplied Wage Rate 0 0 1 99 2 1010 3 1111 4 1212 5 1313 Total Wage Bill nothing MFC -- nothing nothing nothing nothing nothing nothing nothing nothing nothing nothing If the price of the firm's output is $1 and the marginal physical product of labor is constant at 1313, this firm will hire nothing workers at a wage of $ nothing. A firm that requires a person after being hired to become a union member is known as a(n) A. closed shop. B. union shop. C. agency shop. D. open shop. Compared to the time period from 1945 until 1990, the number of annual union strikes in the United states has, on average, ________ since 1990. A. almost doubled B. more than tripled C. significantly declined D. remained about the same Compared to the firm in perfect competition, the monopsonist A. hires fewer workers and pays higher wages. B. hires more workers and pays lower wages. C. hires more workers and pays higher wages. D. hires fewer workers and pays lower wages. Explain how the following events would affect the demand for labor. a. A new education program administered by the company increases labor's marginal product. The demand for labor would increase . b. The firm completes a new plant with a larger workspace and new machinery. The demand for labor would decrease Explain how the following events would affect the demand for labor. a. A new education program administered by the company increases labor's marginal product. The demand for labor would increase . b. The firm completes a new plant with a larger workspace and new machinery. The demand for labor would decrease In the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the following table. Suppose that for the firm, the goods market is perfectly competitive. The market price of the product is $44 at each quantity supplied by the firm. Labor Total Physical Hourly Wage Total Wage Marginal Factor Supplied Product Rate ($) Cost Cost 10 100100 55 5050 minus 11 109109 66 6666 1616 12 116116 77 8484 1818 13 121121 88 104104 2020 14 124124 99 126126 2222 15 125125 1010 150150 2424 What is the amount of labor that this profit-maximizing firm will hire? nothing workers. (Enter a numeric response using an integer.) What wage rate will this profit-maximizing firm pay? $ nothing Other things equal, an increase in the productivity of labor will lead to A. fewer workers being hired. B. no change in the number of workers being hired. C. higher wages. D. lower wages. Unions can increase worker productivity by A. decreasing the demand for non-union-made goods. B. increasing demand for union-made products. C. resolving differences between workers and management. Labor Input 0 1 D. restricting the number of workers employed in the industry. The following table shows the relationship between workers and output for a factory in the short run, with capital held constant. This firm is a monopoly in the output market, and price and marginal revenue for the firm are also given in the table. Find the marginal revenue product of labor (MRPL). Marginal Physical Product Price of Output Marginal Revenue(MR) (MPPL) (P) 0 40 -5050 39 38 2 3535 38 36 3 3030 37 34 4 2323 36 32 5 77 35 30 If the wage rate is $10201020, this firm will hire nothing workers. In general, a monopolist will employ MRPL -nothing nothing nothing nothing nothing more fewer the same number of workers than a similar competitive firm. Labor Input 0 1 The following table shows the relationship between workers and output for a factory in the short run, with capital held constant. This firm is a monopoly in the output market, and price and marginal revenue for the firm are also given in the table. Find the marginal revenue product of labor (MRPL). Marginal Physical Product Price of Output Marginal Revenue(MR) (MPPL) (P) 0 40 -5050 39 38 2 3535 38 36 3 3030 37 34 4 2323 36 32 5 77 35 30 If the wage rate is $10201020, this firm will hire 99 workers. In general, a monopolist will employ fewer workers than a similar competitive firm. The marginal revenue product represents A. the worker's contribution to the firm's output. B. the worker's contribution to the firm's total revenues. C. the value of each additional unit of output. D. the marginal physical product of labor divided by the price of the good produced. MRPL -4141 2828 2727 1919 22 Why does marginal factor cost increase as a monopsonistic firm utilizes more labor but remains unchanged as a perfectly competitive firm employs additional labor? A. The monopsonist needs to pay a higher wage rate to attract an additional worker and since the higher wage rate is paid to all workers the marginal factor costincreases, but a competitive firm needs to pay the same wage rate to hire additional workers, thus its marginal factor cost remains the same. B. The monopsonist faces an upward rising supply curve for labor but a competitive firm faces a perfectly elastic, horizontal supply curve. C. The monopsonist pays a higher average wage than a perfectly competitive firm. D. Both (a) and (b) are true. The Change to Win Federation Congress of Industrial Organizations American Federation of Labor Industrial Workers of the World Teamsters , composed of craft unions, was formed in 1886 under the leadership of Samuel Gompers. Membership increased until after World War I, when the government temporarily stopped protecting labor's right to organize. During the Great Depression, legislation was passed that allowed for collective bargaining. The Employee Free Choice Weingarten Rights National Labor Relations Act of 1935 guaranteed workers the right to form unions. The Congress of Industrial Organizations (CIO), composed of industrial service craft unions, was formed during the Great Depression. The AFL and the CIO merged in 1955. In the United States, union membership as a percentage of the labor force peaked at nearly 10 15 25 40 35 50 percent in 1960 and has declined since then to less than 12 8 1 3 5 percent