Question

Thinking at the Margin As a given retail establishment hires more workers at a cost of $275 per worker they are able to serve increasing amounts of customers based on the following table. You may assume each customer spends on average $5 at this retail establishment otal Workers Customers Benefit (5) Benefit(S) Total Total Marginal Total Marginal Net Benefin (S) Cost (S) 100 1 80 250 310 360 This retail establishment is trying to decide how many workers to hire. Please fill in the table in order to find the answer. Recall total benefit and total cost refer to benefits and costs for all workers whereas marginal benefit and marginal cost refer to the extra benefit or extra cost of hiring the last worker. The best choice is hire4 o hire workers because: (please explain) Economic Policy When policies are enacted, there are always pros and cons. For each policy below, identify at least one pro and one con of the policy. You can draw on anything you may have read or heard. There is no right or wrong answer. Pros Cons Pol Minimum wages - a number of companies and 29 states have a minimum wage higher than the federal level of $7.25 per hour Increase legal immigration increase the annual number of H2B visas. Companies can apply for H2B visas to hire seasonal/temporary workers from foreign countries if no domestic workers are available

Answer 1

The pros of policy of minimum wages is that it will increase the minimum wage that a labour must be paid and will therefore increase the income of the employed labours and increase their welfare.

The cons of the policy of minimum wage is that as it set above the federal level ,it will be more costly for the firms to hire labours and therefore they will choose to decrease their demand for labours and as the wage rates will increase, the supply of labours would also increase, so the supply of labour will be high and the demand will be low. This is lead to a surplus of labours in the market and will increase the unemployment rate.

The pros of increasing legal immigration is that now the firms will be able to hire workers from different parts of the world and will be able to get access to the cheap labour. This will therefore decrease the cost of the firms as the cost of labour will decrease.

The cons of increasing legal immigration is that as the firms would look to hire cheap labour available outside the country , the labours in the country would remain unemployed or if they are employed they will have to work at lower wages. If they demand higher wages, they will not be employed as the firms have an option to hire the cheaper labour available from other nations.