1. Describe the Marshall- Hicks law that is relevant to each of the statements below and explain the reasoning behind each statement.

(12 pts) a. Unions often resist technological advances. For example, in the printing industry the typesetters union strongly resisted, for many years, the introduction of computerized typesetting equipment.

(12 pts) b. Television actors belong to the Screen Actors Guild. The union limits its membership to actors only. Other workers employed by the television networks are not covered.

(12 pts) c. Unions are less likely to press for wage increases for their members when they see that the supply of other inputs is highly elastic.

(24 pts) 2. "An increase in the wage rate for autoworkers will generate a greater decrease in the quantity of labor demanded in the long run than in the short run." Use the Marshall-Hicks laws to give three different reasons in support of this statement.

(18 pts) 3. In recent years, there has been a great deal of concern in the U.S. about outsourcing-- work done for American companies by foreign workers instead of its original workers. To analyze this issue, assume that Microsoft and other American companies initially rely solely on U.S. workers for software development, and then they realize that they can rely on much cheaper labor in India for this purpose.

Draw diagrams showing what will happen in three labor markets:

1. F _S : foreign software developers (who live in India)
2. N _S : native software developers (who live in the U.S.)
3. No: native workers (who live in the U.S.) and are gross complements with software developers, e.g., workers who market and sell software.

How are U.S. consumers likely to be affected?

(11 pts) 4. Suppose that a technological innovation results in the development of a machine that can do certain tasks that unskilled workers used to perform before. Should we conclude that this innovation is destroying jobs and is damaging to labor? Explain.

(11 pts) 5. Using a diagram, illustrate how imposition of a minimum wage may result in increased employment of unskilled workers in the presence of monopsony. Explain.

Price: $15.2

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