ECON 214 HW15 Unemployment Assignment solutions complete answers

ECON 214 HW15 Unemployment Assignment solutions complete answers
 

1. Measuring employment, unemployment, and labor force participation

Consider a tiny hypothetical economy composed entirely of the following people: Manuel, Poornima, Shen, Valerie, Caroline, and Antonio. Each person's employment status is given in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.

Person
Status
Manuel is a 73-year-old professor. He teaches only one or two courses a year, but still publishes research at a productive rate.
 
Poornima is a 29-year-old professional hockey player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position.
 
Shen is a 77-year-old retired professor. He enjoys volunteering at the local public library.
 
Caroline is a 29-year-old who lost her job as an associate producer for a podcast. After spending a few weeks out of work and interviewing for several other positions, she gave up on her job search and decided to go back to grad school. She made that decision a few months ago.
 
Antonio is a famous novelist. He is spending the summer at his lake house Wisconsin, doing a little writing each day but mostly spending his time gardening and reading.
 
Valerie is a 10-year-old student at River Mountain Middle School. She babysits her younger brother and does other chores, so her parents give her an allowance of $25 per week.
 
 

Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

Labor Force Participation RateLabor Force Participation Rate
 =  = 

 

According to this formula, what is the labor force participation rate of this economy of six people?

 

Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.

Unemployment RateUnemployment Rate
 =  = 

 

According to this formula, what is the unemployment rate of this economy of six people?

 

Consider a tiny hypothetical economy composed entirely of the following people: Carlos, Deborah, Felix, Janet, Megan, and Larry. Each person's employment status is given in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.

Person
Status
Carlos is a 72-year-old professor. He teaches only one or two courses a year, but still publishes research at a productive rate.
    
Deborah is a 31-year-old professional hockey player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position.
    
Felix is a 35-year-old graphic designer who is taking 2 years off from work to care for his young child.
    
Megan is a 31-year-old science teacher who taught at River Rock Middle School last year. Due to budget cuts, she was laid off at the end of the school year. It's the summer now, and after a few weeks of vacation with her family, she is looking for a part-time job as a tutor.
    
Larry is a 20-year-old American Studies major at the University of Alabama. It's summer now, and he is working as a lifeguard in Memphis, Tennessee.
    
Janet is a 11-year-old student at River Mountain Middle School. She babysits her younger brother and does other chores, so her parents give her an allowance of $20 per week.
    
Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

Labor Force Participation RateLabor Force Participation Rate
 =  = 
    
According to this formula, what is the labor force participation rate of this economy of six people?

 40%

 50%

 80%

 100%

Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.

Unemployment RateUnemployment Rate
 =  = 
    
According to this formula, what is the unemployment rate of this economy of six people?

 40%

 50%

 80%

 100%

 

Consider a tiny hypothetical economy composed entirely of the following people: Carlos, Deborah, Felix, Janet, Megan, and Larry. Each person's employment status is given in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.

Person
Status
Carlos is a 42-year-old steelworker who was laid off from his job 6 months ago. He is frustrated with his inability to find a new full-time position. Last week, he took a part-time job but was given only 3 hours of work.

Deborah is a 27-year-old recent college graduate. She did not work for pay last week, but she had two job interviews.
    
Felix is a 80-year-old retired professor. He enjoys volunteering at the local public library.
    
Megan is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.
    
Larry is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.
    
Janet is a 11-year-old student at River Rock Middle School. She babysits her younger cousin and does other chores, so her parents give her an allowance of $20 per week.
    
Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

 

Consider a tiny hypothetical economy composed entirely of the following people: Raphael, Susan, Alex, Becky, Eileen, and Clancy. Each person's employment status is given in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.

Person
Status
Raphael is a 23-year-old professional tennis player. When he's not competing, he works as a coach at a local tennis club.
    
Susan is a 40-year-old steelworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.
    
Alex is a 47-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.
    
Eileen is a 29-year-old who lost her job as an associate producer for a podcast. After spending a few weeks out of work and interviewing for several other positions, she gave up on her job search and decided to go back to grad school. She made that decision a few months ago.
    
Clancy is a famous novelist. He is spending the summer at his lake house Wisconsin, doing a little writing each day but mostly spending his time gardening and reading.
    
Becky is a 12-year-old student at Moutain River Middle School. She babysits her younger siblings and does other chores, so her parents give her an allowance of $30 per week.
    
Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

Labor Force Participation RateLabor Force Participation Rate
 =  = 
    
According to this formula, what is the labor force participation rate of this economy of six people?

 33.33%

 40%

 50%

 60%

Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.

Unemployment RateUnemployment Rate
 =  = 
    
According to this formula, what is the unemployment rate of this economy of six people?

 33.33%

 40%

 50%

 60%

 

2. Discouraged workers

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

 They are dissatisfied with their current jobs and are considering quitting.

 They have given up on looking for a job.

 They are counted as part of the labor force by the Bureau of Labor Statistics.

 They have not looked for a job in 4 weeks (or longer), but they would like a job and are available for work.

 

The following table contains U.S. employment information from August 2019.

Civilian Population
Employed
Unemployed
Discouraged
(Persons 16 years old and over)
(Persons)
(Persons)
(Persons)
259,432,000
157,878,000
 6,044,000
467,000
The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which is calculated as follows:

U-4U-4
 =  = 
100×Unemployed+DiscouragedLabor Force + Discouraged100×Unemployed+DiscouragedLabor Force + Discouraged
Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization.

Official Unemployment Rate
U-4 Measure of Labor Underutilization
(Percent)
(Percent)
 
 
 

The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.

Excluding discouraged workers from the official unemployment rate may cause the official rate to the true extent of underemployment.

 

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

 They are dissatisfied with their current jobs and are considering quitting.

 They are employed workers who want to earn higher wages.

 They are counted as part of the labor force by the Bureau of Labor Statistics.

 They have given up on looking for a job.

The following table contains U.S. employment information from August 2018.

Civilian Population
Employed
Unemployed
Discouraged
(Persons 16 years old and over)
(Persons)
(Persons)
(Persons)
258,066,000
155,604,000
 6,197,000
434,000
The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which is calculated as follows:

U-4U-4
 =  = 
100×Unemployed+DiscouragedLabor Force + Discouraged100×Unemployed+DiscouragedLabor Force + Discouraged
Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization.

Official Unemployment Rate
U-4 Measure of Labor Underutilization
(Percent)
(Percent)
    
    
The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.

Excluding discouraged workers from the official unemployment rate may cause the official rate to    the true extent of underemployment.

 

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

 They are dissatisfied with their current jobs and are considering quitting.

 They are counted as part of the labor force by the Bureau of Labor Statistics.

 They have given up on looking for a job.

 They are employed workers who want to earn higher wages.

The following table contains U.S. employment information from August 2019.

Civilian Population
Employed
Unemployed
Discouraged
(Persons 16 years old and over)
(Persons)
(Persons)
(Persons)
259,432,000
157,878,000
 6,044,000
467,000
The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which is calculated as follows:

U-4U-4
 =  = 
100×Unemployed+DiscouragedLabor Force + Discouraged100×Unemployed+DiscouragedLabor Force + Discouraged
Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization.

Official Unemployment Rate
U-4 Measure of Labor Underutilization
(Percent)
(Percent)
    
    
The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.

If the Bureau of Labor Statistics were to include discouraged workers in the official unemployment rate, the reported unemployment rate would    .

 

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

 They are full-time workers who would like to work only part-time.

 They have not looked for a job in 4 weeks (or longer), but they would like a job and are available for work.

 They are counted as part of the labor force by the Bureau of Labor Statistics.

 They are dissatisfied with their current jobs and are considering quitting.

The following table contains U.S. employment information from July 2019.

Civilian Population
Employed
Unemployed
Discouraged
(Persons 16 years old and over)
(Persons)
(Persons)
(Persons)
259,225,000
157,288,000
 6,063,000
368,000
The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which is calculated as follows:

U-4U-4
 =  = 
100×Unemployed+DiscouragedLabor Force + Discouraged100×Unemployed+DiscouragedLabor Force + Discouraged
Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization.

Official Unemployment Rate
U-4 Measure of Labor Underutilization
(Percent)
(Percent)
    
    
The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.

If the Bureau of Labor Statistics were to include discouraged workers in the official unemployment rate, the reported unemployment rate would    .

 

3. Types of unemployment

The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.

Identify each person in the table as structurally, frictionally, or cyclically unemployed.

Unemployment Type
Structural
Frictional
Cyclical
Antonio recently lost his job as a delivery driver. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
 
 
 
 
Caroline just graduated from college and is looking for a full-time position with an investment banking firm.
 
 
 
 
A recent recession has reduced the number of visitors to a local water park. The park has had to lay off many of its employees, including Frances.
 
 
 
 
 

The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.

Unemployment Type
Rate
(Percent)
Frictional
3.9
Cyclical
0.0
Structural
1.1
Total unemployment
5.0
True or False: This economy is not currently at its natural rate of unemployment.

 

The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.

Identify each person in the table as structurally, frictionally, or cyclically unemployed.

Unemployment Type
Structural
Frictional
Cyclical
Frances is a physician who has decided to relocate to California to be closer to her family. She is currently interviewing with several prestigious hospitals in the San Diego area.
 
 
 
 
Demand for new vehicles has fallen during a recent recession, and Latasha has been laid off from her job at an automotive factory.
 
 
 
 
Dmitri recently lost his job as a delivery driver. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
 
 
 
 
The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.

Unemployment Type
Rate
(Percent)
Frictional
3.6
Cyclical
0.0
Structural
1.1
Total unemployment
4.7
True or False: This economy is currently at its natural rate of unemployment.

 True

 False

 

The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.

Identify each person in the table as structurally, frictionally, or cyclically unemployed.

Unemployment Type
Structural
Frictional
Cyclical
Sharon is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job.
 
 
 
 
Lucia just graduated from college and is looking for a full-time position with an investment banking firm.
 
 
 
 
Kenji left his job as an electrician when his wife took a position in another region. The quantity of electrical services demanded is considerably lower in the new region, in part because of high union-negotiated wages. He would like to work at the high union wage but remains unemployed due to a lack of electrician jobs.
 
 
 
 
The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.

Unemployment Type
Rate
(Percent)
Frictional
4.0
Cyclical
0.0
Structural
1.0
Total unemployment
5.0
True or False: This economy is not currently at its natural rate of unemployment.

 True

 False

 

The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics.

Identify each person in the table as structurally, frictionally, or cyclically unemployed.

Unemployment Type
Structural
Frictional
Cyclical
Hilary just moved with her husband to Bismark, North Dakota. She's looking for a job as a judicial clerk.
 
 
 
 
A recent recession has reduced the number of visitors to a local water park. The park has had to lay off many of its employees, including Maria.
 
 
 
 
Edison recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training.
 
 
 
 
The following table presents data on frictional, cyclical, structural, and total unemployment for an economy.

Unemployment Type
Rate
(Percent)
Frictional
3.9
Cyclical
0.0
Structural
0.9
Total unemployment
4.8
True or False: This economy is currently at its natural rate of unemployment.

 True

 False

 

4. Sectoral shifts, frictional unemployment, and job searches

Suppose the world price of aluminum falls significantly. The demand for labor among aluminum-producing firms in Pittsburgh will. The demand for labor among airplane manufacturing firms in Washington, which use aluminum as an input, will. The temporary unemployment that results from sectoral shifts such as the ones describes above is best categorized as unemployment.

 

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

 Establishing government-run employment agencies to connect unemployed workers to job vacancies

 Improving a widely used job-search website so that it matches workers to job vacancies more effectively

 Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government

 

Suppose the world price of tobacco falls significantly. The demand for labor among tobacco-producing firms in Kentucky will    . The demand for labor among cigarette manufacturing firms in Virginia, which use tobacco as an input, will    . The temporary unemployment that results from sectoral shifts such as the ones describes above is best categorized as    unemployment.

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

 Establishing government-run employment agencies to connect unemployed workers to job vacancies

 Improving a widely used job-search website so that it matches workers to job vacancies more effectively

 Taxing the price of placing a resume or posting a job opening on a job-search website

 

Suppose the world price of aluminum rises significantly. The demand for labor among aluminum-producing firms in Pittsburgh will    . The demand for labor among airplane manufacturing firms in Washington, which use aluminum as an input, will    . The temporary unemployment that results from sectoral shifts such as the ones describes above is best categorized as    unemployment.

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

 Improving a widely used job-search website so that it matches workers to job vacancies more effectively

 Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks

 Establishing government-run employment agencies to connect unemployed workers to job vacancies

 

Suppose the world price of aluminum falls significantly. The demand for labor among aluminum-producing firms in Pittsburgh will    . The demand for labor among airplane manufacturing firms in Washington, which use aluminum as an input, will    . The temporary unemployment that results from sectoral shifts such as the ones describes above is best categorized as    unemployment.

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

 Establishing government-run employment agencies to connect unemployed workers to job vacancies

 Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government

 Improving a widely used job-search website so that it matches workers to job vacancies more effectively

 

5. Minimum-wage laws and unemployment

Consider the labor market defined by the supply and demand curves plotted on the following graph.

Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator.

 

 

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will result in a shortage or a surplus.

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.

Wage
Labor Demanded
Labor Supplied
Shortage or Surplus?
(Thousands of workers)
(Thousands of workers)
$9.00
 
 
 
 

Suppose the federal government contemplates a new law that would create a national minimum wage of $9.00 per hour.

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

 If the minimum wage is set at $12.50, the market will not reach equilibrium.

 In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium.

 In this labor market, a minimum wage of $9.00 is binding.

 Binding minimum wages cause frictional unemployment.

 

Consider the labor market defined by the supply and demand curves plotted on the following graph.

Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator.

 

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. Then indicate whether this wage will result in a shortage or a surplus.

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.

Wage
Labor Demanded
Labor Supplied
Shortage or Surplus?
(Thousands of workers)
(Thousands of workers)
$12.50
 
 
    
Suppose the federal government contemplates a new law that would create a national minimum wage of $12.50 per hour.

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

 If the minimum wage is set at $12.50, the market will not reach equilibrium.

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

 Binding minimum wages cause structural unemployment.

 In this labor market, a minimum wage of $9.50 would be binding.

 

Consider the labor market defined by the supply and demand curves plotted on the following graph.

Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator.

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $6.00. Then indicate whether this wage will result in a shortage or a surplus.

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.

Wage
Labor Demanded
Labor Supplied
Shortage or Surplus?
(Thousands of workers)
(Thousands of workers)
$6.00
 
 
    
Suppose the federal government contemplates a new law that would create a national minimum wage of $6.00 per hour.

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

 Binding minimum wages cause cyclical unemployment.

 In this labor market, a minimum wage of $8.50 would be binding.

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

 If the minimum wage is set at $6.00, the market will still be able to reach equilibrium.

 

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

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.

Wage
Labor Demanded
Labor Supplied
Shortage or Surplus?
(Thousands of workers)
(Thousands of workers)
$15.00
 
 
    
Suppose the federal government contemplates a new law that would create a national minimum wage of $15.00 per hour.

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

 In the absence of price controls, a surplus puts upward pressure on wages until they rise to the equilibrium.

 In this labor market, a minimum wage of $15.00 would be binding.

 If the minimum wage were set at $11.50, the market would still be able to reach equilibrium.

 Binding minimum wages increase the natural rate of unemployment.

 

6. Contrasting labor union laws in two states

Consider two hypothetical states that operate under different laws governing labor unions.

The following graph shows the labor market in a state in the West. Initially, the market-clearing wage in this state is $8.00 per hour.

Now, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of $10.00.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

 

Enter $10.00 into the box labeled Wage on the previous graph.

Hint: Be sure to pay attention to the units used on the graph.

At the union wage, 600,000 union workers will be employed.

 

The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar.

The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negotiated the new, higher wage for workers in the western state.

Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the eastern state.

 Adjust the graph to show what happens to employment and wages in the eastern state.

 

 

Which of the following groups are worse off as a result of the union action in the western state? Check all that apply.

 Employers in the western state

 Workers who find new jobs in the eastern state

 All workers in the western state

 Workers in the western state employed at the union wage

 

Consider two hypothetical states that operate under different laws governing labor unions.

The following graph shows the labor market in a state in the West. Initially, the market-clearing wage in this state is $8.00 per hour.

Now, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of $10.00.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

020040060080010001200140016001614121086420WAGE (Dollars per hour)LABOR (Thousands of workers)Demand Supply 

Graph Input Tool

Market for Labor
 
 
 

Wage

(Dollars per hour)
 
 
 
 
 
 

Labor Demanded

(Thousands of workers)
 
 
 

Labor Supplied

(Thousands of workers)
 
Enter $10.00 into the box labeled Wage on the previous graph.

Hint: Be sure to pay attention to the units used on the graph.

At the union wage,

 

union workers will be employed.

The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar.

The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negotiated the new, higher wage for workers in the western state.

Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the eastern state.

 Adjust the graph to show what happens to employment and wages in the eastern state.

DemandSupplyWAGELABORDemand   Supply   

Which of the following groups are better off as a result of the union action in the western state? Check all that apply.

 The original workers in the eastern state

 Workers who find new jobs in the eastern state

 All workers in the western state

 Workers in the western state employed at the union wage

 

Consider two hypothetical states that operate under different laws governing labor unions.

The following graph shows the labor market in a state in the West. Initially, the market-clearing wage in this state is $10.00 per hour.

Now, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of $12.50.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

0125250375500625750875100020.017.515.012.510.07.55.02.50WAGE (Dollars per hour)LABOR (Thousands of workers)Demand Supply 

Graph Input Tool

Market for Labor
 
 
 

Wage

(Dollars per hour)
 
 
 
 
 
 

Labor Demanded

(Thousands of workers)
 
 
 

Labor Supplied

(Thousands of workers)
 
Enter $12.50 into the box labeled Wage on the previous graph.

Hint: Be sure to pay attention to the units used on the graph.

At the union wage,

 

union workers will be employed.

The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar.

The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negotiated the new, higher wage for workers in the western state.

Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the eastern state.

 Adjust the graph to show what happens to employment and wages in the eastern state.

DemandSupplyWAGELABORDemand   Supply   

Which of the following groups are worse off as a result of the union action in the western state? Check all that apply.

 Employers in the western state

 The original workers in the eastern state

 All workers in the western state

 Workers in the western state employed at the union wage

 

Consider two hypothetical states that operate under different laws governing labor unions.

The following graph shows the labor market in a state in the West. Initially, the market-clearing wage in this state is $8.00 per hour.

Now, suppose that the General Assembly in this western state passes a law that makes it easier for workers to join a union. Through collective bargaining, the union negotiates an hourly wage of $10.00.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

020040060080010001200140016001614121086420WAGE (Dollars per hour)LABOR (Thousands of workers)Demand Supply 

Graph Input Tool

Market for Labor
 
 
 

Wage

(Dollars per hour)
 
 
 
 
 
 

Labor Demanded

(Thousands of workers)
 
 
 

Labor Supplied

(Thousands of workers)
 
Enter $10.00 into the box labeled Wage on the previous graph.

Hint: Be sure to pay attention to the units used on the graph.

At the union wage,

 

union workers will be employed.

The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Assume that with the exception of this difference in legislation, the western and eastern states are extremely similar.

The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negotiated the new, higher wage for workers in the western state.

Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the eastern state.

 Adjust the graph to show what happens to employment and wages in the eastern state.

DemandSupplyWAGELABORDemand   Supply   

Which of the following groups are better off as a result of the union action in the western state? Check all that apply.

 The original workers in the eastern state

 Workers who find new jobs in the eastern state

 All workers in the western state

 Workers in the western state employed at the union wage

 

7. The theory of efficiency wages

Why might some firms choose to pay workers a wage above the market equilibrium, even with a surplus of labor in the market? Check all that apply.

 Paying higher wages encourages workers to be more productive.

 Paying higher wages tends to reduce the average experience level of a firm's workers.

 Paying higher wages increases worker turnover.

 Paying higher wages can reduce a firm's training costs.

 

Why might some firms choose to pay workers a wage above the market equilibrium, even with a surplus of labor in the market? Check all that apply.

 Higher wages attract a more competent pool of workers.

 Paying higher wages encourages workers to be more productive.

 Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity.

 Paying higher wages increases worker turnover.

 

Why might some firms choose to pay workers a wage above the market equilibrium, even with a surplus of labor in the market? Check all that apply.

 Higher wages attract a more competent pool of workers.

 Paying higher wages tends to reduce the average experience level of a firm's workers.

 Higher wages cause workers to shirk more of their responsibilities.

 Paying higher wages encourages workers to be more productive.

 

Why might some firms choose to pay workers a wage above the market equilibrium, even with a surplus of labor in the market? Check all that apply.

 Higher wages attract a more competent pool of workers.

 Paying higher wages can reduce a firm's training costs.

 Paying higher wages increases worker turnover.

 Higher wages cause workers to shirk more of their responsibilities.