Skip to ContentGo to accessibility page
OpenStax Logo
Principles of Economics 2e

Self-Check Questions

Principles of Economics 2eSelf-Check Questions

Self-Check Questions

1.

Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and the price at which the firm can sell output in the perfectly competitive market where it operates.

Labor Marginal Product of Labor Price of the Product
1 10 $4
2 8 $4
3 7 $4
4 5 $4
5 3 $4
6 1 $4
Table 14.10
  1. What is the value of the marginal product at each level of labor?
  2. If the firm operates in a perfectly competitive labor market where the going market wage is $12, what is the firm’s profit maximizing level of employment?
2.

Table 14.11 shows levels of employment (Labor), the marginal product at each of those levels, and a monopoly’s marginal revenue.

Labor Marginal Product of Labor Price of the Product
1 10 $10
2 8 $7
3 7 $5
4 5 $4
5 3 $2
6 1 $1
Table 14.11
  1. What is the monopoly’s marginal revenue product at each level of employment?
  2. If the monopoly operates in a perfectly competitive labor market where the going market wage is $20, what is the firm’s profit maximizing level of employment?
3.

Table 14.12 shows the quantity demanded and supplied in the labor market for driving city buses in the town of Unionville, where all the bus drivers belong to a union.

Wage Per Hour Quantity of Workers Demanded Quantity of Workers Supplied
$14 12,000 6,000
$16 10,000 7,000
$18 8,000 8,000
$20 6,000 9,000
$22 4,000 10,000
$24 2,000 11,000
Table 14.12
  1. What would the equilibrium wage and quantity be in this market if no union existed?
  2. Assume that the union has enough negotiating power to raise the wage to $4 per hour higher than it would otherwise be. Is there now excess demand or excess supply of labor?
4.

Do unions typically oppose new technology out of a fear that it will reduce the number of union jobs? Why or why not?

5.

Compared with the share of workers in most other high-income countries, is the share of U.S. workers whose wages are determined by union bargaining higher or lower? Why or why not?

6.

Are firms with a high percentage of union employees more likely to go bankrupt because of the higher wages that they pay? Why or why not?

7.

Do countries with a higher percentage of unionized workers usually have less growth in productivity because of strikes and other disruptions caused by the unions? Why or why not?

8.

Table 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment.

Labor Wage
1 1
2 3
3 5
4 7
5 8
6 10
Table 14.13
  1. What is the monopsonist’s marginal cost of labor at each level of employment?
  2. If each unit of labor’s marginal revenue product is $13, what is the firm’s profit maximizing level of employment and wage?
9.

Explain in each of the following situations how market forces might give a business an incentive to act in a less discriminatory fashion.

  1. A local flower delivery business run by a bigoted White owner notices that many of its local customers are Black.
  2. An assembly line has traditionally only hired men, but it is having a hard time hiring sufficiently qualified workers.
  3. A biased owner of a firm that provides home health care services would like to pay lower wages to Hispanic workers than to other employees.
10.

Does the earnings gap between the average wages of females and the average wages of males prove labor market discrimination? Why or why not?

11.

If immigration is reduced, what is the impact on the wage for low-skilled labor? Explain.

PreviousNext
Order a print copy
Citation/Attribution
Reuse and redistribution of this content in digital or print format:
  • This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's prior written permission.
  • This book uses the Creative Commons Attribution License, which means that you can reuse and modify the material only for noncommercial purposes, must attribute OpenStax, and must distribute any derivative works under the same license.
  • Any commercial printing of this textbook, including using a local or custom printer, must be approved by OpenStax, and proper citation provided.
  • OpenStax-copyrighted images, activities, assessments, and similar components of this book are subject to the same licensing – CC-BY-NC-SA. They can be used for noncommercial purposes with attribution. Commercial use requires permission.
  • Permission requests: Anyone who intends to incorporate this content (including text, images, and other components) into large language models, use it in AI offerings, use it commercially (including in print), and/or has questions about another use case is welcome to complete our reuse request form.
Attribution information
  • If you are redistributing all or part of this book in a noncommercial print format, then you must include on every physical page the following attribution:

    Access for free at https://openstax.org/books/principles-economics-2e/pages/1-introduction

  • If you are redistributing all or part of this book in a noncommercial digital format, then for every page that includes OpenStax content, you must license the derivative work under the same CC-BY-NC-SA license as the original, and include on every digital page view the following attribution:

    Access for free at https://openstax.org/books/principles-economics-2e/pages/1-introduction

Citation information

The information below includes the information needed to generate citations in most major styles (APA, MLA, etc.); you must reformat and organize the information as needed to fit the requirements of the style. Use the information below to generate a citation. We recommend using a citation tool such as this one.

© Jun 15, 2022 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo, and Rice University name, and Rice University logo trademarks, or wordmarks are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.