Question

# 1.Assume we want to compare minimum wage workers in two different industries: fast food and agriculture....

1.Assume we want to compare minimum wage workers in two different industries: fast food and agriculture. If the fast-food industry has fewer substitutes available for labor compared with agriculture, then an increase in the minimum wage will lead to _______ layoffs in the fast-food industry compared to the agriculture industry.

the same

fewer

more

2. A union that requires workers to be part of the union before being hired by companies under that union is referred to as:

Strike

Union Shop

Closed Shop

Collective Bargaining Agreement

Open Shop

3.

 Workers Wage Rate Marginal Factor Cost (MFC) 0 \$9 - 1 \$10 2 \$11 [A] 3 \$12 [B] 4 \$13 [C] 5 \$14 [D] 6 \$15 [E]

Assume the above table describes the supply schedule of labor for a monopsony. What is the marginal factor cost (MFC) of the 3rd worker (i.e. find value [B] in the table above).

\$14

\$1

\$3

\$36

\$12

4.

 Workers Wage Rate Marginal Factor Cost (MFC) Marginal Revenue Product (MRP) 0 \$9 - - 1 \$10 \$34 2 \$11 \$14 3 \$12 \$13 4 \$13 \$12 5 \$14 \$5 6 \$15 \$2

Assume the above table describes the supply schedule of labor for a monopsony. This monopsony should hire ______ workers.

3

5

1

6

4

2

0

1) Since the fast-food industry has fewer substitutes available for labor compared with agriculture, then an increase in the minimum wage will lead to fewer layoffs in the fast-food industry compared to the agriculture industry. The fast food industry will find it difficult to substitute labor for other means of production as there is fewer substitutes for labor and hence only less number of workers will be laid off when minimum wage increases. Hence the answer is option (a).

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