平狄克微观经济学第六版第十四章课后答案
CHAPTER 14
MARKETS FOR FACTOR INPUTS
TEACHING NOTES
The following two chapters examine the markets for labor and capital. Although the
discussi on in this chapter is gen eral, most of the examples refer to labor as the only variable in put to producti on, with the excepti on of Example , which discusses “ The Dema nd for Jet Fuel” by airli nes. Labor dema nd and supply are discussed in the first secti on, and the competitive factor market equilibrium and economic rent are discussed in the second section. Secti on explores the factor market structure for the case where the buyer has mon ops ony power, and secti on explores the case of mono poly power on the part of the seller of the factor.
An un dersta nding of this chapter relies on con cepts from Chapters 4 through 8 and 10.
If you have just covered Chapters 11-13, you might beg in by review ing marginal product, marg inal reve nue, and cost mini mizati on. You should the n discuss marg inal reve nue product and the profit-maximizing condition MRP= w . Explain why we are only interested in the portion of
the MP curve below the average product curve (the downward-sloping portion). The derivation of the firm ' s dema nd curve for labor is straightforward whe n labor is the only factor, but becomes more complicated whe n there are several variable in puts. In particular, you might explain why the MRP curve shifts as the firm substitutes one in put for another in production
in resp onse to a price cha nge by no ti ng that the MRP curve is draw n for a fixed level of the
other variable in put.
When prese nting the market labor dema nd curve, expla in that since the in put prices cha nge as more in puts are dema nded, the market dema nd curve is not simply the summati on of in dividual dema nd curves. You can exte nd the prese ntati on of price elasticity of in put dema nd (see Example by discuss ing the con diti ons leadi ng to price sen sitivity. Elasticity is greater (1) whe n the elasticity of dema nd for the product is higher, (2) whe n it is easy to substitute one in put for ano ther, and (3) whe n the elasticity of supply is higher for other in puts.
Elasticity of supply, which was discussed in Chapter 2, is reintroduced in Example . You should also distinguish between short-run and long-run elasticity (see Figure .
If you have already covered substituti on and in come effects, the stude nts will be ready
for the derivation of the backward-bending supply curve for labor. Although Figure is a
straightforward applicati on of these tools, stude nts are ofte n con fused by the plott ing of
in come aga inst leisure. Point out that this is just ano ther type of utility maximizati on
problem where the two goods are leisure and in come. In come can be thought of as the
con sumpti on of goods other tha n leisure, in that more in come buys more goods. You can also implicitly assume that the price of other goods is $1 and the price of leisure is the wage.
The supply of labor curve is derived by changing the wage and finding the new level of hours
worked. An in dividual ' s supply curve of labor is backward bending only whe n the inc ome effect domin ates the substituti on effect and leisure is a no rmal good. Show typical supply curves for each group in Table . For an experimental study of the labor-leisure trade-off see Battalio,
Green, and Kagel, “ In come-Leisure Tradeoff of Ani mal Wokers, ”
America n Econo mic Review
(September 1981).
Secti on br ings together labor dema nd and supply for both competitive and mon opolistic
product markets. Although econo mic rent was prese nted in Chapter 8, it is rein troduced with
more detail here. In Secti on , carefully expla in why the marginal expe nditure curve is above
the average expe nditure curve for a monopsoni st (see Figure . You can discuss how a mon ops onist
would price discri min ate, ., pay a differe nt wage rate to each employee. With perfect price
discrim in ati on, the marginal reve nue expe nditure curve would coin cide with the average expe nditure curve. Although mon ops ony exists in some markets, the exercise of mon ops ony power
However, the employment of athletes by the owners of
professi onal teams provides a good example (see Example
discusses the case of unions to explore mono poly power on the part of the seller of the in put.
is rare because of factor mobility. Mon ops ony Power in the Market for
Baseball Players ” ).
On this same topic, see Sommers and Quinton, Pay and Performanee in Major League Baseball:
The Case of the First Family of Free Agents, Journal of Huma n Resources (Summer 1982). Section
REVIEW QUESTIONS
1. Why is a firm ' s dema nd for labor curve more in elastic whe n the firm has in the output market
than when the firm is producing competitively
The firm ' s dema nd curve for labor is determ ined by the in creme ntal reve nue from
hiring an additional unit of labor known as the marginal revenue product of labor: MRp = ( MP )( MR the additional output (
“ product ”)that the last worker produced, times the additional revenue earned by selling that output. In a
competitive in dustry, the marginal reve nue curve is perfectly elastic and equal
to price. For a monopolist, marginal revenue is downward sloping. As more
labor is hired and more output is produced, the mono polist will charge a lower
product will be smaller for the monopolist.
reve nue product for the mono polist is more in elastic firm. 2. Why might a labor supply curve be backward bending
A backward-be nding supply curve for labor may occur whe n the in come effect of an
in crease in the wage rate domin ates the substituti on effect. Labor supply
decisi ons are made by in dividuals choos ing the most satisfy ing comb in ati on of
work and other (leisure) activities. With a larger in come, the in dividual can afford to work fewer hours: the in come effect. As the wage rate in creases, the value of leisure time (the opportu nity cost of leisure) in creases, thus in duc ing the in dividual to work lon ger hours: the substituti on effect. Because the two
effects work in opposite directions, the shape of an individua
l ' s labor supply curve depe nds on the in dividual ' s prefere nces
for in come, con sumpti on, and
leisure.
3. How is a computer compa ny ' s dema nd for computer programmers a derived dema nd
A computer compa ny s dema nd for in puts, in clud ing programmers, depe nds on how many computers it sells. The firm ' s dema nd for program ming labor depe nds on (is derived from) the dema nd it faces in its market for computers. As dema nd for computers shifts, the dema nd for programmers shifts. mon opoly power
price and marginal revenue will diminish.
All else the same, marginal revenue
This implies that the margi nal than for the competitive
4. Compare the hiring choices of a monopsonistic and a competitive employer of workers.
Which will hire more workers, and which will pay the higher wages Explain. Since the decision to hire another worker means the monopsonist must pay a
higher wage for all workers,
and not just the last worker hired, its marginal expenditure
curve lies above the input supply curve (the average expenditure curve). The monopsonist 's profit -maximizing input demand, where the marginal
expenditure curve intersects the marginal revenue product curve, will be less
than the competitor ' s profit -maximizing input
choice, where the average expenditure curve intersects the demand curve. The monopsonist hires less labor,
and the wage paid will be less than in a competitive market.
5. Rock musicians sometimes earn over $1 million per year. Can you explain such large incomes in terms of economic rent
Economic rent is the difference between the actual payment to the factor of production and the minimum
amount that the factor is willing to accept. In this
case, you might assume that there are a limited number of top-quality rock musicians who will continue to play rock music no matter what they are paid. This results in a perfectly inelastic supply curve, or something close to it. Given the high demand for rock music, the wage will be very high and there will
be a lot of economic rent. If there was a larger supply of top-quality rock musicians, or a more elastic supply, then the economic rent would be smaller.
6. What happens to the demand for one input when the use of a complementary input increases
If the demand for the complementary input increases, the demand for the given input will increase as well.
When demand for the complementary input increases,
there is an increase in the quantity hired and possibly the price paid. Both of
MRP of the given input, and hence will increase
the quantity hired and possibly the price paid. marginal expenditure on it
The decision to increase employment means the monopsonist must pay higher price, and not just the last unit hired. expenditure curve lies above the input supply curve (the average expenditure curve). Hiring
more labor will increase the marginal expenditure, which will increase the average expenditure. If the average expenditure is increasing, then the marginal expenditure must be greater than the average expenditure.
8. Currently the National Football League has a system for drafting college players by which each player is picked by these changes will increase the Whether the prices of the
7.
inputs increases
firm.
For a monopsonist, depends on the degree of what is the relationship monopsony power on the part between the supply of the of an input and the
all units the
Therefore, its marginal
only one team. The player must sign with that team or not
play in the league. What would happen to the wages of newly drafted and more experienced football players if the draft system were repealed, and all teams could compete for college players
The National Football League draft and reserve clause (a primary issue in the
1987-1 988 season 's strike) creates a monopsonist cartel among the owners of NFL
teams. If the draft system were repealed, competition among teams would increase wages of football players to the point where the marginal revenue product of each player would be equ al to the player ' s wage.
9. The government wants to encourage individuals on welfare to become employed. It is considering two possible incentive programs for firms.
A. Give the firm $2 per hour for every individual on welfare who is hired.
B. Give each firm that hires one or more welfare workers a payment of $1000 per year, irrespective of the
number of hires.
To what extent is each of these programs likely to be effective at increasing the employment opportunities for welfare workers
Firms will hire additional labor as long as the extra benefit is greater than
the extra cost of hiring the worker, or until MRP L = w. Option A would be effective because if the firm receives $2 per hour for every welfare worker hired then the effective wage paid, w, will fall and the firm will find it optimal to hire more labor until the benefits (MRP L) again equal the costs (w)
at the margin. Option B would be effective at increasing employment
opportunities also in that if the firm hires an individual who has been on welfare they will then receive $1000.
However, plan B is not necessarily as effective as plan A given the firm only receives one lump sum payment
regardless of the number of welfare workers hired. In this case the firm only
has an incentive to hire the one welfare worker, though they may of course choose to hire more tha n one welfare worker.
10. A small specialty cookie compa ny, whose only variable in put is labor, finds that the
average worker can produce 50 cookies per day, the cost of the average worker is $64 per
day, and the price of a cookie is $1. Is the cookie company maximizing its profit Explai n.
The marginal product of labor is 50 (cookies per day) and the price per cookie
is 1 ($ per cookie) so the marginal reve nue product is $50/day. Since this is
less than the wage of $64 per day the cookie company is not maximizing profit.
They are emplo ying too much labor since the cost of labor is greater tha n the
ben efit of labor at the margi n, and are therefore produc ing too many cookies.
11. A firm uses both labor and mach ines in producti on. Expla in why an in crease in the average wage rate causes both a moveme nt along the labor dema nd curve and a shift of the
curve.
An in crease in the wage rate causes an upward moveme nt along the labor dema nd
curve. For any give n marginal reve nue product curve, the firm will find that
they want to hire fewer workers whe n the wage in creases (an upward moveme nt).
However, whe n the wage in creases the margi nal cost will in crease which will
reduce desired output. When output falls, the firm will not need as many machines and the marginal product of labor curve will shift to the left,
assum ing mach ines and labor are compleme ntary. This will also reduce the
dema nd for labor.
EXERCISES
1. Suppose that the wage rate is $16 per hour, and the price of the product is $
2.
Values for output and labor are in un its per hour.
q L
0 0
20 1
35 2
47 3