Economic management BSA 1. Describe the three possible uses of an individual's time, and give an example of each. 2. Explain the concept of the "net utility of work." How is it useful in developing the labor supply curve? 3. How does a rational consumer allocate time among competing uses? 4. Suppose that the substitution effect of an increase in the wage rate exactly offsets the income effect as the hourly wage increases from $12 to $13. What would the supply of labor curve look like over this range of wages? Why? 5. Suppose that the cost of living increases, thereby reducing the purchasing power of your income. If your money wage doesn't increase, you may work more hours because of this cost-of-living increase. Is this response predominantly an income effect or a substitution effect? Explain. 6. Suppose that two jobs are exactly the same except that one is performed in an air-conditioned workplace. How could you measure the value workers attach to such a job amenity? 7. Why might permanent wage differences occur between different markets for labor or within the same labor market? 8. What characterizes a winner-take-all labor market? Offer some reasons why corporate heads now earn relatively more than they did in 1980. 9. Distinguish between mediation and binding arbitration. Under what circumstances do firms and unions use these tools? What is the role of a strike in the bargaining process? 10. Why might firms in industries with high fixed costs be inclined to prevent strikes or end strikes quickly? 11. Why are unions more effective at raising wages in oligopolistic industries than in competitive industries? 12. Both industrial unions and craft unions attempt to raise their members' wages, but each goes about it differently. Explain the difference in approaches and describe the impact these differences have on excess quantity of labor supplied. 13. Identify four ways that unions try to increase demand for unionized workers