THE MAIN PURPOSE OF A LABOR UNION / TUTORIALOUTLET DOT COM THE MAIN PURPOSE OF A LABOR UNION / TUTORIALOUTLET | Page 38

industry. Why is part of the tax shifted to workers? What is the
deadweight loss of the
payroll tax?
Q2. Why does the payroll tax have the same impact on wages and
employment regardless
of whether it is imposed on workers or on firms?
Q3. Show how the imposition of a minimum wage on a monopsony
can increase both
wages and employment.
Q4. Suppose that the government raises the minimum wage by 20
percent. Thinking of
the four Marshall‘s rules of derived demand as they apply to a
particular industry, analyze
the conditions under which job loss among teenage workers in that
industry would be
small.
Q5. Let total market demand for labor be represented by ED = 1,000 –
50w where ED is
total employment and w is the hourly wage.
1) What is the market clearing wage when total labor supply is
represented by
ES = 100w – 800? How many workers are employed? How much
producer surplus is
received at the equilibrium wage?
2) Suppose the government imposes a minimum wage of $16. What is
the new level of
employment? How much producer surplus is received under the
minimum wage?
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Describe the importance of understanding culture in global business
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