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Chapter 28: Q. 1- For Critical Thinking (page 643)

Would a higher minimum wage rate cause a shift of a firm's labor demand curve or a movement along that curve? Explain.

Short Answer

Expert verified

A small raise would increase employee productivity while decreasing employee turnover. A shift in the equilibrium quantity of the employment product; a transition in the production line. Companies will also want to employ fewer people if indeed the wage rates go up.

Step by step solution

01

Introduction.

Raising the minimum wage would also enhance customer expenditure, benefit company bottom lines, and aid economic growth. A small raise would boost worker productivity while decreasing employee turnover rate. It will also promote economic growth as a whole by boosting customer market pressure.

02

A manufacturing or service equilibrium price.

A change in quantity demanded of the product that labour produces; a change in the manufacturing process that uses more or fewer workers; and a shift in state policies that affect the number of employees firms want to hire at a specific rate.

03

Explanation. 

Employers will also want to hire fewer people if the wage rate rises. The quantity of labour demanded will decrease, and the demand curve will shift upward.

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Most popular questions from this chapter

Consider Figure 28-7. Suppose that the monopolist is contemplating hiring 14 units of labor, which it knows would cause the marginal product to decline to 150 units of output per unit of labor. The product price also decreases to \(4.50 per unit, and the firm's marginal revenue declines to \)3.20 per unit. What would be the firm's marginal revenue product if it hires a 14th unit of labor?

Since the beginning of this century, there has been a significant increase in the price of corn-based ethanol.

a. A key input in the production of com-based ethanol is com. Use an appropriate diagram to explain what has likely occurred in the market for corn if the supply curve has not shifted.

b. In light of your answer to part (a), explain why many hog farmers, who in the past used corn as the main feed input in hog production, have switched to cookies, licorice, cheese curls, candy bars, and other human snack foods instead of corn as food for their hogs.

Why would increased use of robotic sewing machines on the part of a clothing manufacturer cause the marginal product derived from utilization of these machines to decline?

If more firms were to find ways to induce larger numbers of workers to hold true to labor supply commitments, would the market labor supply curve tend to shift to the left or to the right? Explain your reasoning.

Refer back to your answers to Problem 28-1 in answering the following questions.

a. What is the maximum wage the firm will be willing to pay if it hires 15 workers?

b. The weekly wage paid by computer printer manufacturers in a perfectly competitive market is $1200. How many workers will the profit-maximizing employer hire?

c. Suppose that there is an increase in the demand for printed digital photos. Explain the likely effects on marginal revenue product, marginal factor cost, and the number of workers hired by the firm?
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