Question

Reality television has altered the labor market for entertainment over the past two decades. An aspiring actor or actress no longer needs to find an agent and wait years for an opportunity to audition for a specific role. Today, aspiring actors and actresses can freely audition (often by submitting a self-produced video online) to one of many audition processes for reality shows such as Big Brother, The Voice, and America's Got Talent. From the reality show's perspective, producers are constantly looking to cast new people each season. Using the tools of labor supply and demand, explain how reality television has changed the labor market for entertainers. O It has increased labor supply and decreased labor demand. It has decreased labor supply and demand. It has increased labor supply and demand. O It has increased labor demand and decreased labor supply. Would unions be more likely to organize successfully in highly competitive markets or in markets with monopsony power? Monopsony power because fewer workers are hired at lower wages Competitive markets because fewer workers are hired at lower wages Competitive markets because more workers are hired at higher wages Monopsony power because more workers are hired at higher wages

Answer 1

Answer 1 -

Reality television has altered the labor market for entertainment over the past two decades. An aspiring actor or actress no longer needs to find an agent and wait years for an opportunity to audition for a specific role. Today, aspiring actor and actresses can freely audition (often by submitting a self – produced video online) to one of many audition processes for reality shows such as Big brother, The Voice and America’s Got Talent. From the reality show’s perspective, producers are constantly looking to cast new people each session.

Labor supply has increased because

1. Aspiring actors do not have to find an agent who gives them opportunity to audition
2. Auditioning is easier because it is easy to reach the audition process by submitting the video online

So, actors and actresses who are willing to work in the reality shows industry get the opportunity without so many barriers.

Similarly, demand for labor has also increased because producers look for new talent every session.

Thus, it has increased labor supply and demand. (Option C)

Answer 2 - In a highly competitive market, the individual worker is a price taker and has no control over the market. If he wishes to discontinue from the market, then his withdrawal does not have any impact on the employers, who easily replace him at the market wage rate.

If the labor market is controlled by one employer or an employer cartel, union can raise wage without affecting the number of workers employed. In a non – unionized market, the monopsonist will hire up to the point where MC of labor = MR.

In monopsonistic labor markets, minimum wage laws will have the same effect.

If the wage is below the minimum wage level, employment will expand. Once the new employment equilibrium has been reached, however, further increases in the wage rate will reduce the employment level, unless they are accompanied by an increase in labor demand.

Because of these effects, the economic argument for unions and minimum wage laws is most powerful when employers enjoy significant monopsony power. In highly competitive markets, unions are less successfully because the demands of the union wage are restricted by negative effects on total employment.

So, the answer is Option (D).