Labor Market Issues's homeworl - Assignment Example

Labor Market Issues Question The firm will prefer inelastic demand on labor from other firmsin order to raise wages while keeping labor supply is restricted.The graph I shows an inelastic labor supply curve. A small positive change in wage causes a small restricted upward shift in labor demand from and the quantity of labor supplied to employers increases. In addition, II above is the inelastic demand curve. A fall in wages causes a download shift of .Question 2The pure wage advantage is defined as the amount that a unions wage exceeds the nonunion wage in an instance when the union wage did not exist.

The formula is given by;Pure Union Advantage, Hotdog unionization causes a 25% increase in wages for worker coming from nonunionized companies’.Spillover effect occurs when there is a fall in nonunion wages that comes as a result of displaced union workers supplying their services in nonunion labor markets.Union Advantage as a result of spillover effect is given by The advantage here is that there is a 100% increase in wages if workers from nonunionized company banana went to work for hotdog.

Question 3(a) It’s called the threat effect, which is an increase in nonunion wages as a result of nonunion employers responding to competitive wages and chances of conversion to unionization.(b) , it seems like the union cause an increase of 20% in wages, when essentially they cause a 50% increase.Question 4Prevailing wage rule applies when the government or any relevant public institution tries to pay comparable wages in contrast to the private sector. Several Federal laws require many employers to engage in performance of federal contracts so that they can pay prevailing wages to their employees.

This ensures that nonunion employers do not gain unfair advantage in bidding federal tenders.Question 5Cost and benefits of having a voluntary military are;CostsPaper costs involved in the use of drafts during war.There in long period before costs and expenses are recovered. The breakeven point is long. So it takes the government long before they get sufficient revenue.The increased chance of incarceration of young retired military personnel involved in violent crimes increases the cost management.

BenefitsSmaller manageable Army personnel numbers.Fully compensated military personnel hence few resignations.Question 6The income tax effect, assuming the labor supply is elastic, is that it causes an increase in the number of hours worked and on the other increasing wages. Looking at (b) above, the effect of income tax is that it decreases employment from 6 to 5 and in the process increased the wage from $18 to $20.Question 7Looking at the graph below, the equilibrium wage and quantity is $7 and respectively on the labor supply curve and labor demand curve.

An increase in minimum wage above $7 reduces the quantity of labor demanded by employers to. However, a fall in minimum wage to $5 causes quantity of labor demanded by employers to be greater than, but only a quantity of potential employees will be willing to work at the wage of $5.Works CitedBlanchard, Oliver and David R Johnson. Macoreconomics. Boston: Pearson, 2013.Hubbard, Gelnn R. and Anthony P. OBrien. Economics. Boston: Pearson, 2013.Krugman, Paul R and Robin Wells. Macroeconomics. New York: Worth Publishers, 2013.