Q3: Use the following data to answer the questions that follows. Assume a perfectly competitive product market. Assume a Monopsony in the labor market. Quantity Wage Total Marginal Total ?? ?? Labor Wage Cost Labor Cost Product $10 10 $11 19 3 $12 27 4 $13 34 5 $14 40 $15 45 $16 49 8 $17 52 a. If the price of the product produced is selling for $3, what will be the quantity of labor hired? Show all your math b. Using your answer to part (a), compare the firm't total revenue to the total amount paid for labor? c. If a union could successfully negotiate a wage increase for its members without increasing or decreasing the number of workers employed, what would the worker wage be? Q4: Describe the impact on labor wages of physical capital-intensive manufacturing. That is how do machines impact the wages of employees?Q5: Review the case study below. Describe some ways that an employer might adjust to an increase in the minimum wage The Moimimm [Rage In 200?, Congress and the president passed a law increasing the minimum wage om $5.15 to 5125 an hour in three steps of it! cents over two years. AI the time, only about 4 percent of all workers earned less than 5125 an hour. That group included mostly young workers. the majority part time, primarily in service and sales jobs. When the law was passed 3E] states plus the District of Columbia had their own minimum wages exceeding $5.15, with Washington State the highest at $193. in addition, more than lt'I'EI municipalities across the nation have introduced socalled in'ngH-wgo laws that set minimum wages exceeding federal or state minimums. In Washington, DC, for example, certain employers must pay at least $1 1.5 per hour. Ever since a federal minimum wage of 25 cents was established in 1933, economists have been debating the benets and costs of the law. The law initially covered only 43 percent of the wororceprimarily workers in large rms involved in interstate commerce. Over the years. the minimum wage has been raised and the coverage has been broadened. By 2911:}, coverage more than doubled to about 99 percent of the workforce [groups still not covered include those working in small retail establishments and in small restaurants). Advocates of nnnimumwage legislation argue that it can increase the income of the poorest workers. Critics claim that it can cause employers either to cut nonwage compensation or to eliminate jobs. Dozens of studies have examined the effects of the minimum wage on employment. A few found a small positive effect on employment. but most found either no effect or a negative effect. particularly for teenage workers. One reason a higher minimum wage may not reduce total employment is that employers often respond by substituting part time jobs for fulltime jobs, by substituting morequalified minimumwage workers {such as college students) for less-qualied workers {such as high school dropouts), and by adjusting nonwage components of the job to reduce costs or increase worker productivity. Here are some nonwage adjustments an employer could impose on workers in response to a higher minimum wage: reduced work hours. less convenient work hours, greater expected work effort, less onthejob training. less time for meals and breaks, less extra pay for night shifts. fewer paid vacation days. fewer paid holidays, less sick leave, fewer health-care benets, tighter limits on arriving late for work or leaving early. greater restrictions on personal phone calls or texting, and so on. For example, one researcher found that restaurants responded to a higher minimum wage by reducing vacation time and cutting nightshin premiums. Other researchers found that the imposition of a livingwage ordinance in Los Angeles caused employers to switch from untrained workers to those with formal training. Of most concern to economists is a possible reduction in onthejob training of young workers, especially those with little education. A higher minimum wage also raises the opportunity cost of staying in school. According to one study, a higher minimum wage encouraged some 115 to 19yearolds to quit school and look for work. though many failed to nd jobs. Thus, an increase in the minimum wage may have the unintended consequence of cutting school enrollment. And those who had already dropped out were more likely to become unemployed. By December 201319. more than half of Aican American males in their teens who wanted to work could not nd jobs. A survey of 193 labor economists found that 8? percent believed "a minimum wage increases unemployment among young and unskilled workers.\" Minimum-wage increases, however. have broad public support. In one poll, the highest support, 81 percent, came om those aged 13 to 29. the group most likely to be affected by a hike in the minimum wage. Sources: David Fairris and Leon Bujanda. "The Dissipation of Minimum Wage Gains for Workers Through LaborLabor Substitution: Evidence om the Los Angeles Living Wage Ordinance,\" Southern Economic Journal, T5 {October Ell-DE): 41'396: Robert Whaples. "Is There Consensus Among American Labor Economists?\" Journalr ofLaoor Researcn 27" {T all 1996): TEET34: William Alpert. The Mtnt'rnurn Wage in the Restaurant Industry (Praeger. 1936); "Lost Wages of Youth.\" Wall Street Journal, 5 March EDIE]; and Joseph Sabia. \"Identifying Minimrun Wage Effects," Industrial Reiati'ons, 43 (April 213%): 311323