How would the following factors affect equilibrium in the market for labor?
a. An increase in the demand for the product that a firm is producing
b. The use of a new technology that halves the time that workers will take to produce a good
c. An increase in the age when people begin to receive Social Security benefits.
a. Since the demand for labor is derived from the demand for the final product that labor produces, the demand for labor will increase. Other things remaining unchanged, the demand curve will shift to the right and employment and the wage rate will increase.
b. This is an example of a labor-complementary technology. Since it increases workers' productivity, the labor demand curve will shift to the right. Other things remaining unchanged, employment and the wage rate will increase.
c. Increasing the Social Security age will increase the supply of labor as some people who would have dropped out of the labor force will now continue to work. This will shift the labor supply curve to the right. Other things remaining unchanged, the wage rate will fall and employment will increase.
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Economists have found that the price elasticity of demand for water is higher in the summer than in the winter. Why is this likely to be so?
A. Winter water use tends to be for necessities such as cleaning and cooking, and summer water use tends to be for both necessities and non-necessities such as gardening and recreation. B. Winter is longer than summer, and price elasticity is lower over longer time horizons. C. Summer is longer than winter, and price elasticity is higher over longer time horizons. D. People take more vacations in the summer and so use less water at home.
Financial intermediaries are specialists in the production of
A) market failure. B) information. C) traded assets. D) commercial paper.
A situation where a consumer's willingness to use an item depends on how many others use it is
A) a positive-sum game. B) a network effect. C) price-leadership. D) a vertical merger.
Demand functions in the multiplicative form are most common for all of the following reasons except:
a. elasticities are constant over a range of data b. ease of estimation of elasticities c. exponents of parameters are the elasticities of those variables d. marginal impact of a unit change in an individual variable is constant e. c and d