firm in an industry could take advantage of a reduced wage and all other firms a
ID: 2439548 • Letter: F
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firm in an industry could take advantage of a reduced wage and all other firms aying the old wage, how would one best describe the single firm's reaction to wage, assuming labour is the only variable input? The marginal revenue thoduct of labour curve would remain unchanged, and the firm would hire more labour at the lower wage. shifts to the left, and the firm hires more labour at the lower wage on the new curve b. shifts to the right, and the firm hires more labour at the lower wage on the new curve shifts to the left, and the firm hires less labour at the lower wage on the new curve shifts to the right, and the firm hires less labour at the lower wage on the new curve. d. e. Labour is typically assumed to be the only variable input in very short-run production systems, and the number of variable inputs increases as we lengthen our planning horizon from short run to long run. What happens to the labour demand curve as we move from short run to long run? The demand curve becomes less elastic. a. b. The demand curve elasticity does not change c. d. The demand curve becomes upward sloping. The demand curve becomes more elastic. Suppose the federal government allows labour unions to act as the sole seller in labour markets, but the government collects a $1 per hour fee to cover unemployment insurance for each union worker. Assuming this fee is not so large that it forces the unions to disband, what is the impact of this fee on the equilibrium wage and employment level in the monopolized labour market? a. b. c. d. After-tax wages and employment decline. After-tax wages increase and employment declines. Employment increases and after-tax wages decline. There is no change in after-tax wages or employment levels. Firefighters are highly skilled workers who are typically employed by city municipalities. If a city reduces the wage rate paid to firefighters to be less than the equilibrium wage rate, what happens to the economic rents earned by the firefighters? a. They increase. b. They decrease. c. They remain unchanged d. Public employees like firefighters cannot earn economic rents.Explanation / Answer
Ans-1. would remain unchanged, and the firm would hire more labor at the lower wage.
Ans-3. No change in wages or employment levels.
Ans-4 decrease
As economic rent is the positive difference between the actual payment made for a labor to highly skilled workers and the payment level expected by them, due to its exclusivity or scarcity, it decreases when a city reduces the wage rate paid to firefighters to be less than the equilibrium wage rate.
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