"An increase in the wage rate always leads to an increase in the number of hours worked." Is this statement true or false? Draw as many diagrams as necessary and explain.
False.
The backward sloping supply curve of labour is an exception to the basic law of supply. It means that after a worker starts getting a certain decent/high level of wages, beyond that they prefer more of leisure time (non-paid time) over their working hours (paid time) which leads to the backward slope of the supply curve. At this point even an offer for more higher wages will not induce the labourer to work for more hours. Thus, an increase in the wage rate does not always necessarily lead to an increase in the number of working hours.
"An increase in the wage rate always leads to an increase in the number of hours...
Union A faces a demand curve in which a wage of $4 per hour leads to demand for 20,000 person hours and a wage of $5 per hour leads to demand for 10,000 person hours. Union B faces a demand curve in which a wage of $6 per hour leads to demand for 30,000 person hours, while a wage of $5 per hour leads to demand for 33,000 person hours. Which union faces the more elastic demand? Explain.
True or false 7. The marginal rate of substitution is always the same constant number when the goods are imperfect substitutes and no matter how many of each good is being consumed.
Question 1: (a) The Wage Setting Relation is given by: WS: W-1"F(u, z) Explain the effect of an increase in the unemployment rate, u, on nominal wage, W. Be sure to explain both intuitively using words and using the above equation. (b) The Price Setting Relation is given by: PS: P (1 m)W Explain the relationship between monopoly power and the markup, m. (c) Re-arrange PS and show that an increase in the markup leads to a decrease in the...
Define the nominal wage rate and the real wage rate. Can the nominal wage rate increase faster than the real wage rate, if yes, then why? (3 points)
An increase in the nominal wage will increase potential output. A. False B. True
True or False? Typically, increasing sales also leads to an increase in accounts receivable. The increase in accounts receivable is typically financed by both short and long-term assets.
An increase in the real interest rate leads to were we it lead
4. Steve's utility function over leisure and consumption is given by u(L,Y)= min (3L,Y). Wage rate is w and the price of the composite consumption good is p = 1. (a) Suppose w = 5. Find the optimal leisure - consumption combination. What is the amount of hours worked? (b) Suppose the overtime law is passed so that every worker needs to be paid 1.5 times their current wage for hours worked beyond the first 8 hours. Will this law...
An employee receives an hourly wage rate of $23, with time-and-a-half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 43; federal income tax withheld, $133; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; and federal unemployment compensation tax, 0.8% on the first $7,000. What is the net amount to be paid to the employee? Round your...
Lorrie will receive a nominal wage increase of 25% this year. If the inflation rate turns out to be 5% this year, her real wage will increase by approximately how many percents?