In a perfectly competitive labor market, what will be the impact of an increase in labor...
Question:
In a perfectly competitive labor market, what will be the impact of an increase in labor productivity on equilibrium wages and employment? Design a diagram to support your answer.
Labor Demand and Supply Curves:
The labor demand curve shows the relationship between the wage rate and the quantity of labor demanded. On the contrary, the labor supply curve depicts a connection between the wage rate and the quantity of labor supplied.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerAn improvement in labor productivity will lead to a rise in the marginal product of labor and thus cause a rightward change in the labor demand curve....
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Microeconomic Shifts in Supply and Demand Curves
from
Chapter 2 / Lesson 6
19K
In microeconomics, shifts in supply and demand curves occur due to changes in demand and supply for goods or services caused by different factors like changes in consumers' disposable income. Determine the microeconomic shift factors of supply and demand curves, and understand their impact on equilibrium and prices paid by consumers.
Related to this Question
- Design a graph that shows how an increase in the minimum wage might affect employment in: A) a competitive labor market. B) a labor market characterized by monopsony.
- Explain the role labor's productivity plays in wage determination, in the competitive labor market. If productivity increases, what happens to wages, and why?
- In a competitive labor market, if the supply of labor decreases, how will the equilibrium wage rate and employment change? a) Wage Rate: Increase; Employment: Increase b) Wage Rate: Increase; Employment: Decrease c) Wage Rate: Decrease; Employment: Increa
- Assume a competitive labor market has just become a monopsony. What impact will this have on worker's wages and employment opportunities?
- What is the effect of the following market structure on the equilibrium wage and on the level of employment: Monopsony.
- A. Explain the role labor productivity plays in wage determination in the competitive labor market. B. If productivity increases, what happens to wages and why?
- What is the impact of an increase in the wage of workers (one of the inputs of production) on the supply curve?
- Briefly, what's labor productivity? Support your answer using a diagram.
- Which of the following summarizes the impact of population growth on the labor market? A.) This will increase the labor supply, reduce the equilibrium wage, and increase the quantity of labor demande
- How does efficiency wage affect the labor market equilibrium?
- Use a diagram to illustrate how each of the following will impact the market for a given occupation. Include the changes in equilibrium wage and employment. a. A decrease in product demand. b. A job b
- In a competitive labor market, an increase in the equilibrium wage rate could result from: a. a decrease in the demand for labor. b. an increase in the supply of labor. c. an increase in the demand for labor. d. a decrease in the number of workers represe
- Explain what an increase in capital and/or technology does to wages, equilibrium full employment, productivity, and standard of living. Show this shift in a production function graph and labor supply graph drawn together one above the other.
- Assuming competitive factor markets, graphically illustrate and discuss the effect of an increase in the wage rate in a competitive labor market.
- Consider the labor market illustrated in the figure below, where the market equilibrium wage is W_1 and equilibrium employment is L_1. Suppose the opportunities in other labor markets increase. Show the effects of the change in the labor market by drawing
- What is the effect of the following market structure on the equilibrium wage and on the level of employment: Union Monopoly.
- What is the effect of the following market structure on the equilibrium wage and on the level of employment: Bilateral Monopoly.
- The supply curve for labor in a purely competitive market slopes upward because: a. the wage rate paid to workers falls as more are hired. b. the marginal product of labor falls as output increases. c. marginal resource cost rises as productivity increase
- Suppose that in a competitive output market, firms hire labor from a competitive labor market. If the supply of this kind of labor decreases, we would expect which of the following regarding the equilibrium wage, w, and the equilibrium quantity of labor,
- Explain how each of the following events would affect wages in a particular labor market: An increase in labor productivity in the market. An increase in the supply of labor in the market. An increase in wages in another labor market that workers can e
- How would the following be likely to affect the economywide supply of labor? \\ Increased productivity causes real wages to rise. - The supply of labor would decrease. - The supply of labor would remain unchanged. - The supply of labor would increase.
- What is the effect of change in wage rate on demand for labor in perfectly competitive market?
- Using a graph of the classical labor market, illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage. What will eventually happen in this labor market
- Consider the labor market. Begin with the labor market in equilibrium. Now, suppose, there is an increase in the productivity of labor. It will cause employment to A. increase. B. decrease. C. remain unchanged. D. be Indeterminate.
- Explain the effect of increase in productivity of workers on demand for labour, on wages and on the number of workers hired.
- Explain the effect of a wage increase on the supply of labor at the market level.
- For a given labor supply, would the potential unemployment impact of an increase in the minimum wage be greater in the case of elastic or inelastic demand for labor? Explain.
- What would be the shape of the labor supply curve if the income effect was always equal to the substitution effect? Explain using a diagram.
- In the market for cars, the trade union has succefully negotiated a 20% increase in wages for workers in this sector. With the aid of a well labelled diagram, explain the effect of the wage increase (ceteris paribus) on the supply of cars.
- In the market for cars, the trade union has successfully negotiated a 20% increase in wages for workers in this sector. With the aid of a well labelled diagram, explain the effect of the wage increase (ceteris paribus) on the supply of cars. In 1 above, w
- What would be the impact of an increase in the minimum wage on demand and supply for labor and the overall market?
- How can competition in a scarce labor market affect wages? a) Wages will go down because productivity is lower. b) Wages will remain level because firms want to keep existing workers. c) Wages will
- Consider a labor market equilibrium in which employment is 100,000 workers, the wage rate is $10/hour, supply elasticity is 2.0, and the demand elasticity is 4.0. Use this data to calculate the impact of imposing an $11/hour minimum wage on (a) employment
- Suppose the importance of manufacturing wages on labor supply increases by 50%. What is the impact on the economy?
- Which of the following determines equilibrium wages in perfectly competitive labor markets? a. The government. b. Monopoly employers. c. Where the supply and demand of labor are equal. d. The requirements of a living wage.
- Why does a market labor supply curve have a positive slope even though individual labor supply curves may be backward bending? A. As wages rise, more and more workers will enter the market. B. As wages rise, all workers will be willing to work more hours.
- Which of the following determines equilibrium wages in perfectly competitive labour markets? a. The government. b. Monopoly employers. c. Where the supply and demand of labor are equal. d. The requirements of a living wage.
- Suppose a stock market boom raises people's wealth. In a competitive labor market, how will this change the equilibrium real wage and level of employment?
- 1. A rightward shift in the demand curve for labor will have which effect on equilibrium wages and employment? a) Increase equilibrium wages and employment b) Decrease equilibrium wages and employme
- If workers become more productive, how does that impact labor demand? Illustrate the impact on a labor market graph where you have wage rate on the vertical axis and quantity of workers on the horizon
- In a labour demand and supply diagram, show the effects of the following events. In each case, discuss the changes in the equilibrium wage and employment. a. an increase in the wage income tax. b. a new trade agreement that allows for foreign competition
- Why is the supply curve of labor usually upward sloping? a. As the wage increases, the opportunity cost of labor increases, causing individuals to devote more time to work, b. As the wage increases, purchasing power increases, causing individuals to devot
- [{Blank}] argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. a. Efficiency wage theory, b. Equilibrium wage
- Which of the following would not shift the market demand for labor, ceteris paribus? A. The wage paid to labor. B. The demand for final products. C. The productivity of labor. D. The number of employers.
- Explain the labor supply incentive effects of an increase in the hourly wage of an individual currently working for wage income. Graphically illustrate one possible set of incentives.
- If a monopsony labor market suddenly were transformed into a perfectly competitive labor market, how would the wage and employment change? A. Both would increase. B. Both would decrease. C. The wage would remain constant, but employment would increase. D.
- Initially the market for labor is in equilibrium, and then laborers suddenly are willing to work more hours. In that case, what happens to the equilibrium wage? and the quantity of workers employed? a
- Using a diagram of the labor market, show the effect of an increase in the minimum wage on the wage paid to workers, the number of workers supplied, the number of workers demanded, and the amount of unemployment.
- Demand for labor is decreasing for any given real wage. a. Explain two reasons why an economy might see a decrease in the demand for labor. b. Using the relevant graphs, show and explain the effect on wage, employment, unemployment, and potential GDP. c.
- Suppose the wage increases. What effect will this have on a worker's labor supply? The substitution effect of a wage increase causes the worker to supply _____ quantity of labor.
- According to the shirking? model, an efficiency wage increases worker productivity because A. the wage is high enough above the market wage to eliminate shirking. B. it gives workers an incentive to r
- An efficiency wage: A. is higher than the market wage and tends to increase productivity B. is lower than the market wage and tends to increase productivity C. is higher than the market wage and tends to decrease productivity D. is lower than the market w
- Explain what effect a reduction in productivity has on wage-setting behavior, price-setting behavior, the equilibrium real wage, the natural rate of unemployment, and the natural level of output.
- The intersection between labor supply and labor demand determines the equilibrium wage and the equilibrium level of employment. Why might some firms pay workers a wage above the market equilibrium, ev
- State two ways the labor supply curve shifts to the right. Explain how each way impacts the equilibrium wage, equilibrium full employment, total output, productivity, and standard of living in the eco
- What does the supply-of-labor curve look like if the substitution effect equals the income effect? Explain your answer.
- Suppose a particular labor market was in a market-clearing equilibrium. What could happen to cause the equilibrium wage to fall? Suppose price levels were rising each year, but money wages were "sticky downward" and never fell. How would real wages in thi
- Using a labor supply-labor demand diagram, illustrate how each of the following events will affect equilibrium wages and employment in the market for teachers. a. A new scholarship program subsidizes
- The efficiency wage model of unemployment is an adaptation of the supply and demand model of a market. In graphical form, it is illustrated like this: Why does unemployment exist, according to this model? Why doesn't the market adjust to an equilibrium in
- If there is a surplus in labor, what is a possible result? A. unemployment may be low B. wages paid would increase C. wages paid would decrease D. wages would be at equilibrium
- If labor productivity increases: a. the demand for labor increases. b. labor costs rise by equal increments. c. jobs will relocate. d. some workers will be laid off. e. none of the above
- What effect would an increase in labor productivity as a result of a better-educated population have on aggregate demand or aggregate supply?
- Suppose labor unions and all other workers agree to a cut in wages to stimulate the economy. In which direction would this cause the aggregate supply curve to shift? Explain.
- If total factor productivity rises in the one-period model, explain what happens to the real wage in equilibrium, and why.
- How would an improvement in technology that increased the marginal productivity of labor change a firm's cost curves and what is the impact on all cost curves?
- If the labor demand curve shifts to the left and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment?
- State two ways the labor supply curve shifts to the right. Explain how each way impacts the output, productivity, and standard of living in the economy. Include the formulas for productivity and standard of living in your answer.
- Using the perfectly competitive labor demand and labor supply model, what would happen, all else being equal, to the real wage and the number of workers if, in a particular occupation, the good that workers are producing is no longer as popular as it once
- How would a labor market that is competitive and initially in equilibrium be affected by these changes? a) labor market for university professors when college enrollment expands? b) the labor market for workers who have only completed high school when t
- Compute equilibrium values for the real wage and employment and illustrate this equilibrium on a labor market diagram based on the following assumptions.
- Consider the perfectly competitive labor market with labor demand L^D = 100 - 2Q and labor supply L^S = 20 + 2W. Suppose the government implemented a minimum wage of $25. What is the impact on average wages and unemployment?
- What occurs in the labor market when the prevailing wage (price) exceeds the equilibrium wage (price)? a) Unemployment rises b) A shortage occurs c) A surplus arises d) Unemployment falls
- Assume that the market supply curve for labor curve is upward-sloping. Which of the following statements explains why this could occur? a) As the wage rises, most workers want to work fewer hours. b)
- For each of the following factors that may affect market equilibrium in a specific labour market, describe which curve will be shifted and how this shift will affect wage rates: (a) Regulation requir
- How wages are determined in labor markets? Explain, how a monopsony market structure is affected by a price floor (minimum wage), and what is the effect of the monopsony of the local economy?
- Explain how an increase in the productivity of labor will affect short-run aggregate supply.
- When the minimum wage is above the equilibrium wage, what occurs? a. There will be a shortage of labor. b. There will be no effect on the number of people employed. c. There will be an increase in the unemployment rate. d. There will be a decrease in the
- How will an increase in the productivity of labor affect short-run aggregate supply?
- How does an increase in the productivity of labor affect short-run aggregate supply?
- In a monopsony model of a labor market, as more labor is hired, the marginal factor cost of labor: a. rises. b. is constant. c. is zero. d. decreases.
- What are the effects on the long-run aggregate supply curve if the labor force becomes more productive over time?
- Describe how the immigration of workers affect labor supply, labor demand, the marginal product of labor, and the equilibrium wage?
- A) What is an efficiency-wage? B) How might payment of an above-market wage reduce shirking by employees and reduce worker turnover? C) How might efficiency wages contribute to downward wage inflexibility, at least for a time, when aggregate demand declin
- Efficiency wages are set: a. above the equilibrium wage and create a shortage of labor b. above the equilibrium wage and create a surplus of labor c. below the equilibrium wage and create a shortage of labor d. below the equilibrium wage and create a surp
- Explain how a decrease in non-labor income affects hours of work. Support your answer with a graph, and provide an explanation.
- Question 45 (2.1 points) Improvements in labor productivity Question 45 options: A) affect the level of profit, but do no affect the rate of economic growth. B) affect the level of wages, but do no
- A monopsonist buys labor for less that the competitive wage. What type of inefficiency will the use of monopsony power cause. How does the answer change if the monopsonist in the labor market were also a monopsonist in the output market?
- If the graph shown is displaying a competitive market and the market is currently offering a wage less than P* A. there would be excess workers who want to work at that wage. B. there would be unemployment in the market. C. firms will have a hard time fin
- If the labor supply curve shifts to the right and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? 1) Graph a new labor supply curve that has shifted to the right as described abov
- An increase in the marginal productivity of labor will tend to: a. shift the labor supply curve rightward if the change is temporary. b. result in an increase in employment if the change is temporary. c. result in an increase in employment if the change
- Why might firms pay wages that are above the equilibrium wage in a market? A. to increase the productivity of their workers B. to reduce the unemployment rate C. to encourage workers to form labor unions D. to reduce profit
- How does the immigration of workers affect labor supply, labor demand, the marginal product of labor, and the equilibrium wage?
- Which of the following would increase the supply of labor? a. a decrease in the wages paid to workers b. an increase in the wage paid to workers c. additional workers in the work force d. all of the above e. B and C above only
- Suppose a minimum wage is set at a level above the equilibrium wage. Which of the following describes the unemployment created that is associated with movement along the supply curve of labor? a. workers who used to work, but no longer can find employment
- Explain the follow question 14. A monopsony employer facing a perfectly competitive supply of labor would pay a wage equal to marginal revenue product 15. Wages for labor will be highest in labor ma
Explore our homework questions and answers library
Browse
by subject