This problem asks you to consider a roofing company. The
company hires workers to install new roofs.
You should assume both the (output) market for roofs and the
labor market for roofers are perfectly
competitive, and that the firm must pay the equilibrium wage
set in the labor market and charge the
equilibrium price for installing a new roof set in the market
for roofs. You may additionally assume the
relevant labor market is “roofers in Northeast Iowa”.discuss
the impact on the quantity of labor that a typical
profit-maximizing roofing
company will hire. Use graphs to explain your answer and
summarize your answer in a sentence
The field switches from using 3-tab shingles to architectural
shingles. Because 3-tab shingles
need to be installed more precisely, it takes a roofer longer
to install them. Architectural
shingles are more forgiving, allowing a roofer to install more
roofs per week.
i. Assume first this change impacts our representative firm
only. Our small firm
hires a very small percentage of all the roofers in Northeast
Iowa.
ii. Now assume all roofing companies switch to architectural
shingles. What will
happen in the labor market for roofers? How will this impact
the final number of
roofers hired?