英文版微觀經(jīng)濟(jì)學(xué)復(fù)習(xí)提綱Chapter 12. The ma

12TheMarketsforLabourandOtherFactorsofProductionChapterSummaryFirmsusefactorsofproductiontoproducegoodsandservices.Afirm’sdemandforanyfactorofproductionisaderiveddemand.ThedemandcurveforlabouristherelationshipbetweenthewagerateandthequantityoflabourdemandedThefourmostimportantfactorsthatcausedemandtochangeareincreasesinhumancapital,changesintechnology,changesinthepriceoftheproduct,andchangesinthequantityofotherinputs.Thesupplycurveforlabouristherelationshipbetweenthewagerateandthequantityoflaboursupplied.Thethreemostimportantfactorsthatcausesupplytochangeareincreasesinpopulation,changingdemographicsandchangingalternativeemploymentopportunities.Equilibriuminthelabourmarketoccurswherethequantityoflabourdemandedequalsthequantitysupplied.Changesindemandandsupplychangetheequilibriumwagerateandquantityoflabour.Ahighermarginalrevenueproduct(MRPoflabourwillresultinaworkerreceivingahigherwagethanaworkerwithalowermarginalrevenueproduct.Compensatingdifferentialsrefertohigherwagesforworkerswhohavedangerousjobs.Economicdiscriminationonthebasisofrace,genderorsomeotherirrelevantcharacteristiccanalsoexplainwagedifferences.InAustralia,aworkerwhoisamemberofatradeunionearnsahigherwagethananon-unionmember.Personneleconomicsexamineshumanresourceissuessuchashowfirmshire,train,andpromoteworkersandsetwagesandbenefits.Themarketsforcapitalandnaturalresourcescanbeanalysedusingtheapproachusedtoanalysethemarketforlabour.Themarginalproductivitytheoryofincomedistributionstatesthatindividualsreceiveincomeequaltothemarginalcontributiontoproductionfromthefactorsofproductiontheyown,includinglabour.Themorefactorsofproductionanindividualowns,andthemoreproductivethosefactorsare,thehighertheindividual’sincomewillbe.LearningObjectivesWhenyoufinishthischapteryoushouldbeableto:1.Explainhowfirmschoosetheprofit-maximisingquantityofworkerstoemploy.Firmscomparetheadditionalrevenueearnedfromhiringaworker(themarginalrevenueproductoflabourtothecostofpayingaworker.Aslongasthemarginalrevenueproductisgreaterthantheworker’swagerate,thefirmwillcontinuetohiremoreworkers.Themarketforlabourandotherfactorsofproduction1822.Explainhowpeoplechoosethequantityoflabourtosupply.Thehigherthewageonecanearnworking,thehighertheopportunitycostofleisure.Asthewageincreases,peoplechooselessleisureandworkmore.Althoughmostindividualshaveupward-slopinglaboursupplycurves,itispossiblethatthesecurvesarebackward-bending(positivelyslopedathighwages.3.Explainhowequilibriumwagesaredeterminedinlabourmarkets.Theequilibriumwageisdeterminedattheintersectionofthedemandandsupplycurvesforlabour.Changesinthedemandandsupplyforlabourwillchangetheequilibriumwagerate.4.Usedemandandsupplyanalysistoexplainhowcompensatingdifferentials,discrimination,andtradeunionscausewagestodiffer.Higherwagesareneededtocompensateworkersforjobsthataredangerousorhaveunpleasantaspects.Wagedifferentialscanbeexplainedbyeconomicdiscrimination,butmostgapsbetweenwagesofwhitemalesandothergroupsisexplainedbydifferencesineducation,experienceanddifferentpreferencesforjobs.Holdingotherfactorsconstant,beinginaunionincreasesaworker’swagesbutmosteconomistsbelievethatunionshavenotraisedthetotalamountofwagesreceivedbyworkers.5.Discusstherolepersonneleconomicscanplayinhelpingfirmsdealwithhumanresourcesissues.Anewfocusoflaboureconomicsapplieseconomicanalysistohumanresourceissues.Theseissuesincludehowfirmshire,train,andpromoteworkersandsettheirwagesandbenefits.6.Showhowequilibriumpricesaredeterminedinthemarketsforcapitalandnaturalresources.Thedemandforcapitalandthedemandfornaturalresourcesarebasedontheirmarginalrevenueproducts.Firmsthatproducecapitalgoodsfaceincreasingmarginalcostssothesupplycurveforcapitalgoodsisupward-sloping.Thesupplyoflandisusuallyupward-slopingbutthequantityofsomelandisperfectlyinelastic.Inequilibrium,suppliersofcapitalandlandreceivepricesequaltotheirmarginalrevenueproducts.ChapterReviewChapterOpener:WhyDidLiverpoolFootballClubPayHarryKewell$150,000aWeek?Wagesandsalariesforprofessionalathletesaredeterminedbythedemandforandsupplyoftheirservices,thesamefactorsthatdeterminewagesandsalariesinanylabourmarket.Peopleusuallyearnmostoftheirincomefromwagesandsalaries,sotheyviewthelabourmarketasthemostimportantmarketinwhichtheyparticipate.Thischapterwill,amongotherthings,explorewhysportsstarssuchasHarryKewellarepaidconsiderablymorefortheirlabourthannursesorteachers.TheDemandforLabourAderiveddemandisthedemandforafactorofproductionthatisderivedfromthedemandfortheproductthefactorproduces.Thedemandforlabourisdependentontheamountofoutputproducedandtheadditionalrevenuereceivedfromsellingthatoutput.Themarginalproductoflabouristheadditionaloutputafirmproducesasaresultofhiringonemoreworker.Becauseofthelawofdiminishingreturns,themarginalproductoflabourdeclinesasafirmhiresmoreworkers.Todecidehowmanyworkerstohire,afirmmustcomparetheadditionalrevenueitearnsfromhiringanotherworkertotheincreaseincostsfrompayingtheworker.Themarginalrevenueproductoflabour(MRPcurveisthedemandcurveforlabour.Inconstructingthedemandcurveforlabour,allvariables,exceptthewagerate,thataffectthewillingnessoffirmstodemandlabourareheldconstant.Achangeinthewageratecausesachangeinthequantityoflabour183Chapter12demanded.Ifanyofthenon-wagevariableschange,thedemandcurvewillshift.Therearefourimportantnon-wagefactorsthataffectthedemandforlabour.(1Increasesinhumancapital.Humancapitalreferstotheaccumulatedtrainingandskillsthatworkerspossess.(2Changesintechnology.Asnewandbettermachineryisdeveloped,workersbecomemoreproductiveandthelabourdemandcurveshiftstotheright.(3Changesinthepriceoftheproduct.Higherpricesincreasethemarginalrevenueproductoflabourandthelabourdemandcurveshiftstotheright.(4Changesinthequantityofotherinputs.Workersareabletoproducemoreiftheyhavemoremachineryandotherinputstoworkwith.(5Changesinthenumberoffirmsinthemarket.HelpfulStudyHintSolvedProblem12.1(page372featuresanexampleofSonyCorporationchoosingthenumberofworkerstohiretomaketelevisions.ProblemsandApplicationsquestion2isrelatedtothistopic.TheSupplyofLabourTheopportunitycostofleisureisthewage.Thehigherthewageonecanearnfromworking,thehighertheopportunitycostofleisure.Normallythelaboursupplycurveisupward-slopingbutitispossibleforthecurvetobebackward-bendingathighwages.Anincreaseinthewageraisestheopportunitycostofleisureandcausesaworkertodevotemoretimetoworking.Thisisthesubstitutioneffectfromachangeinthewage.Becauseleisureisanormalgood,asthewagerises,theincomeeffectofawagechangecausesaworkertodevotelesstimetoworkingandmoretimetoleisure.Whetheraworkersuppliesmoreorlesslabourfollowingawageincreasedependsonwhetherthesubstitutioneffectisgreaterthantheincomeeffect.Thesupplycurveoflabourisconstructedholdingconstantallvariablesotherthanthewage.Ifanyofthenon-wagevariableschange,thesupplycurvewillshift.Themostimportantnon-wagevariablesareincreasesinpopulation,changingdemographics,andchangingalternativesinotherlabourmarkets.HelpfulStudyHintBecarefulnotconfusethesupplyoflabourwiththesupplyofjobs.Youareusedtoviewingyourselfasconsumerratherthanasaproducer.Whenyousearchforajob,yourepresentthesupplysideofthelabourmarket,whileemployersrepresentthedemandside.EquilibriumintheLabourMarketDemandandsupplyareusedtodetermineequilibriuminthelabourmarket.Demandandsupplyarealsousedtoanalysechangesintheequilibriumwageandthelevelofemployment.Increasesinlabourproductivitycauseincreasesinthedemandforlabourandincreasesintheequilibriumwageandnumberofworkersemployed.Anincreaseinthelaboursupply,ifthelabourdemandisunchanged,willdecreasetheequilibriumwageandincreasethenumberofworkersemployed.Themarketforlabourandotherfactorsofproduction184HelpfulStudyHintMakingtheConnection12.1(page378describesthesignallinghypothesisindeterminingthevalueofauniversityeducation.MakingtheConnection12.2(page382explainswhytheincomegapwithinthesportingandentertainmentindustrieshavebeengrowingovertime.ExplainingDifferencesinWagesDifferencesinmarginalrevenueproductarethemostimportantfactorinexplainingdifferencesinwages.Themoreproductiveaworkerisandthehigherthepricetheworker’soutputcanbesoldfor,thehigherthewagetheworkerwillreceive.Compensatingdifferentialscanalsoexplainwagedifferences.Compensatingdifferentialsarehigherwagesthatcompensateworkersforunpleasantaspectsofajob.InAustralia,malesonaverageearnmorethanfemalesandpeoplefromnon-Englishspeakingbackgrounds.Onepossibleexplanationforthisdifferenceiseconomicdiscrimination.Economicdiscriminationreferstopayingapersonalowerwageorexcludingapersonfromanoccupationonthebasisofanirrelevantcharacteristicsuchasraceorgender.ExcludinggroupsfromcertainjobsorpayingonegroupmorethananotherisillegalinAustralia,butsomeemployersignorethelaw.Mosteconomistsbelievethatonlyasmallamountofthegapbetweenthewagesofmalesandothergroupsisduetodiscrimination.Mostofthegapinwagesisduetodifferencesineducation,differencesinexperience,anddifferingpreferencesforjobs.ManyeconomistsarguethateconomicdiscriminationisnolongeramajorfactorinlabourmarketsinAustraliabecauseemployerspayaneconomicpenaltyifitcanbeprovedthattheyengageineconomicdiscrimination.Workers’wagescandifferdependingonwhethertheyaremembersoftradeunions.Atradeunionisanorganisationofemployeesthathasthelegalrighttobargainwithemployersaboutwagesandworkingconditions.TheproportionofpeoplewhobelongtoaunioninAustraliahasbeenconsistentlyfallingsincethe1970s.InAustralia,itisestimatedthatunionworkersdonotreceivestatisticallyhigherwagesthanworkerswhoarenotinunions.HelpfulStudyHintDon’tLetThisHappenToYou!(page381usesAdamSmith’sfamousdiamond-waterexampletoexplainthatpricesandwagesaredeterminedatthemargin.MakingtheConnection12.2(page382explainshowtechnologicaladvanceshaveraisedthesalariesofthehighest-paidperformersinsportsandentertainment.ProblemsandApplicationsquestions11and12refertothetopicsdiscussedinthesefeatures.SolvedProblem12.2(page384describestheargumentsforandagainstcomparableworthlegislation.PersonnelEconomicsPersonneleconomicsistheapplicationofeconomicanalysistohumanresourcesissues.Personneleconomicsanalysesthelinkbetweendifferencesinjobsanddifferencesinthewayworkersarepaid.Firms185Chapter12needtodesigncompensationpoliciesthattakeintoaccountdifferencesintheskillrequirementsofjobs,workingenvironmentsandtheextentofinteractionamongworkers.Onecompensationpolicyfirmsconsideriswhetherworkerswillreceiveacertainwageorsalaryperweekormonth,orbepaidacommissionorpiece-ratepay.Althoughacommissionorpiece-ratesystemofcompensationcanbemoreprofitablethanasalarysystemforsomefirms,otherfirmshavegoodreasonstochooseasalarysystem.Firmschooseasalarysystemwhenthereisdifficultyinmeasuringoutputandattributingoutputtoaparticularworker,orthereareconcernsaboutoutputquality.Manyworkersdisliketheriskinherentinapiece-rateorcommissioncompensationsystem.HelpfulStudyHintMakingtheConnection12.3(page389describesthesuccessfulintroductionofapiece-ratesystemofcompensationattheSafeliteGlassCorporation.TheMarketsforCapitalandNaturalResourcesThemarketsforotherfactorsofproductionareanalysedinmuchthesamewayasthemarketforlabour.Thedemandforcapitalisaderiveddemand.Physicalcapitalincludesmachinery,equipmentandbuildings.Themarginalrevenueproductofcapitalcurveisthedemandcurveforcapital.Thesupplycurveforcapitalgoodsisupward-slopingbecausethefirmsthatproducecapitalgoodsfaceincreasingmarginalcosts.Themarginalrevenueproductcurvefornaturalresourcesisthedemandcurvefornaturalresources.Thesupplycurvefornaturalresourcesisusuallyupward-sloping.Insomecasesthequantityofanaturalresourceisfixedandwillnotchangeaspricechanges.Economicrent(orpurerentisthepriceofafactorofproductionthatisinfixedsupply.HelpfulStudyHintBecarefulwhendecidingwhetherthequantityofanaturalresourceisfixed.Forexample,manypeoplebelievethesupplycurveforoilisverticalbecause“there’salimitedamountofoilintheearth’scrust.”Thesepeoplehaveconfusedthestockofoilwiththeflowofnewlyproducedoil.Quantitysuppliedistheflowofnewlypumpedoil.Asthepriceofoilrises,itbecomeseconomicaltoreopenclosedoilwells,increasingtheflowsupply.Sothesupplycurveforoilisnotverticalafterall.Monopsonyreferstoafirmthatisthesolebuyerofafactorofproduction.Amonopsonyrestrictsthequantityofafactordemandedtoforcedownthepriceofafactorandincreaseitsprofits.Afirmwithamonopsonyinalabourmarketwillhirefewerworkersandpaylowerwagesthanwouldbethecaseinacompetitivemarket.Themarginalproductivitytheoryofincomedistributionisthetheorythatthedistributionofincomeisdeterminedbythemarginalproductivityofthefactorsofproductionthatindividualsown.Themorefactorsofproductionanindividualowns,andthemoreproductivethosefactorsare,thehighertheindividual’sincomewillbe.Themarketforlabourandotherfactorsofproduction186SolvedProblemChapter12includestwoSolvedProblemstosupportlearningobjectives1(“Explainhowfirmschoosetheprofit-maximisingquantityofworkerstoemploy”and4(“Usedemandandsupplyanalysistoexplainhowcompensatingdifferentials,discrimination,andlabourunionscausewagestodiffer”.ThefollowingSolvedProblemsupportsanotherofthischapter’slearningobjectives.SolvedProblem16-3Supportslearningobjective5:Discusstherolepersonneleconomicscanplayinhelpingfirmsdealwithhumanresourcesissues.“HeyYou,SewingJeans.GetOuttaMyFace!”MakingtheConnection12.3describedastudyoftheSafeliteGlassCorporationconductedbyEdwardLazear.Workerproductivityandprofitsbothincreasedwhenthefirmabandonedastraight-timepaysysteminfavourofapiece-ratesystem.LazearfounddifferentresultsforLeviStrausswhentheclothingcompanychangeditscompensationschemeintheoppositedirection.Levi’sisaworker-orientedcompany.Ithadgoodintentionswhenthepieceworksystemwasabandonedin1992.Underthatsystem,individualworkersperformedsingle,specialisedtasksandwerepaidaccordingtotheworktheycompleted.Underthenewsystem,groupsof10-35workerssharedtasksandwerepaidaccordingtotheworktheycompleted…insteadofmotivatingworkers…itdamagedmoraleandtriggeredcorrosiveinfighting.Skilledworkerswerepittedagainstslowercolleagues.Threatsandinsultsbecamecommon…thequantityofpantsproducedperhourplungedin1993to77percentofpre-teamlevels…labourandoverheadcostsracedup25percent.Itwasadisaster.Source:EdwardP.Lazear.“PersonnelEconomicsandEconomicApproachestoIncentives.”TheHongKongCentreforEconomicResearchLetters,vol.61.September/October2000.ButLazearfoundthatateamincentiveapproachworkedverywellforBritishPetrolandExploration(BPE.Ateamincentiveapproachrewardsworkersbasedontheoutputproducedbyagroupofworkers.ThefirmhasanoilfieldinPrudhoeBay,Alaskawithabout300workers.Sixmonthsafterintroducingitsteambonusapproach,productivityincreasedmorethan12percent.(aWhydidtheteamincentiveapproachfailatLeviStraussbutwassuccessfulatBPE?(bUnderwhatcircumstancesarepieceworksystemsandteamincentiveapproacheslikelytobesuccessful?SolvingtheProblemStep1:Reviewthechaptermaterial.Thisproblemconcernsthematerialin“PersonnelEconomics,”soyoumaywanttoreadthissectionofthetextbookwhichbeginsonpage387.Step2:Answerquestion(a.TheteamincentiveapproachfailedatLeviStraussbecauseproducingjeansdoesnotrequireteamwork.AswastruewithproductionatSafelite,eachtaskiseasilyperformedbyindividualworkersandcanbemonitored.Whentheteamincentiveapproachwasusedtherewasatendencyforsomeworkerstobe“freeriders”–tonotworkveryhard,letothersdomostoftheworkbutstillgetpaidthesame.AtBPE’sPrudhoeBayfield,outputcouldnotbeproducedbyoneworker.TeamworkatBPEwasnecessarytoproduceoil.Team-basedpaywaseffectivebecauseproductionwas187Chapter12trulyateameffort.Step3:Answerquestion(b.InsummarisingthelessonslearnedfromtheexperienceofLeviStraussandBPE,Lazearwrote:“Forproductionworkers,pay[based]onoutputisveryeffective.However,manyfirmsarereluctanttotiecompensationtotangiblemeasuresofoutput…Itiseasiertosimplypayeverybodythesame…Team-basedpayisonlyeffectivewhenproductionistrulyateameffort.Oftentimes,teamincentivesareweakandmaycauseresentment.”Self-Test(AnswersareprovidedattheendoftheSelf-Test.Multiple-ChoiceQuestions1Whydoeconomistssaythatlabourdemandisaderiveddemand?aBecauseinordertoderivelabourdemand,wemustderivelaboursupplyfirst.bBecausethedemandforlabourisderivedfromthedemandfortheproductsproducedbyworkers.cBecausethedemandforlabourdependsontheamountofcapitalavailable.Withoutcapitalthereisnoneedforlabour.dBecausethedemandforlabourdependsentirelyonthewillingnessofthefirmtohireworkers.2Linkoneofthetermsbelowtothefollowingdefinition:“___________isthechangeinthefirm’srevenueasaresultofhiringoneadditionalworker.”aMarginalcost.bMarginalrevenue.cMarginalproductoflabour.dMarginalrevenueproductoflabour.3Whathappensasthenumberofworkersincreases?aMarginalproductoflabourdecreasesandmarginalrevenueproductoflabourincreases.bMarginalproductoflabourincreasesandmarginalrevenueproductoflabourdecreases.cBoththemarginalproductandthemarginalrevenueproductoflabourincrease.dBoththemarginalproductandthemarginalrevenueproductoflabourdecrease.4Whichofthefollowingistheequivalentofthedemandcurveforlabour?aThemarginalrevenueproductcurve.bThemarginalproductoflabourcurve.cThefirm’sdemandcurveforitsproduct.dThefirm’stotalrevenuecurve.Themarketforlabourandotherfactorsofproduction1885Refertothetablebelow.Howmanyworkersshouldthefirmhireinordertomaximiseprofit?a2.b3.c4.d5.6Allofthefactorslistedbelowcausethedemandcurveforlabourtoshift,exceptone.Whichone?aAchangeinthewage.bAchangeinhumancapital.cAchangeintechnology.dAchangeinthepriceoftheproduct.7Accordingtothesubstitutioneffect,whatistheimpactofanincreaseinthewage?aAnincreaseintheopportunitycostofleisure.bAnincreaseintheopportunitycostofwork.cAdecreaseintheopportunitycostofleisure.dAnincreaseinpurchasingpower.8Alongabackward-bendingsupplycurve,whicheffectprevailsatlowwagelevels?aThesubstitutioneffectprevailsovertheincomeeffect.bTheincomeeffectprevailsoverthesubstitutioneffect.cNeithereffectprevailsovertheother.dTheworkeffectprevailsovertheleisureeffect.9Achangeinoneofthefollowinglaboursupplyfactorswouldcauseamovealongthelaboursupplycurveratherthanashiftofthecurve.Whichone?aAchangeindemographics.bAchangeinalternativesavailableinotherlabourmarkets.cAchangeinpopulation.dAchangeinthewage.189Chapter1210Accordingtothesignallinghypothesis,whatsignaldoesauniversityeducationsendtoprospectiveemployersaboutacollegegraduate?auniversitygraduatesrequirehigherwageswithoutnecessarilybeingmoreproductivethannon-universitygraduates.buniversitygraduatespossesscertaindesirablecharacteristicssuchasself-disciplineandtheabilitytomeetdeadlines.cAuniversitygraduatehasknowledgethatisworthpayingfor.dAuniversitygraduatedeservesajobbecauseshehasmadeaninvestmentineducation.11Refertothefigurebelow.Judgingbytherelativepositionofsupplyanddemandineachoftheselabourmarkets,whichoccupationappearstooffermoredesirableworkingconditions,allelsethesame?aA.bB.cC.dD.12Whichofthefollowingismorerelevantindeterminingthewagesoffootballplayers?aThetotalvalueofthefootballgames.bThemarginalvalueoffootballgames.cBoththetotalvalueandthemarginalvalueareequallyimportant.dTheeducationalleveloffootballplayers.13Whenanemployerpayshigherwagestocompensateworkersforunpleasantaspectsoftheirjobs,whichofthefollowingistheemployeroffering?aAdiscriminatingwage.bAtradeunionwage.cAcompensatingdifferential.dAriskpremium.Themarketforlabourandotherfactorsofproduction19014Whichofthefollowingistrueabouteconomicdiscrimination?aEconomicdiscriminationisillegal,thereforeimpossible.bEconomicdiscriminationisbothlegalandpossible.cEconomicdiscriminationisillegal,butitispossiblethatemployersareignoringthelaw.dEconomicdiscriminationislegal,butfewifanyemployerswouldactuallypracticeit.15Whichofthefollowingisleastlikelytobethecauseofdifferencesbetweenthewagesofmalesandthoseofothergroups?aEconomicdiscrimination.bDifferencesineducation.cDifferencesinexperience.dDifferentpreferencesforjobs.16Whichofthefollowingisatextbookargumentaboutemployerdiscriminationofworkers?aEmployerswhodiscriminatepayaneconomicpenaltybecauseveryfewworkersarewillingtoworkforadiscriminatingemployer.bEmployerswhodiscriminatepayaneconomicpenaltyimposedbythemarketsystemandbycompetition.cEmployerswhodiscriminatereceiveaneconomicrewardbykeepingonlythemostproductiveworkers.dEmployerswhodiscriminatearerewardedbyauthoritieswhousuallyignoretheircriminalbehaviour.17Ifdiscriminationmakesitdifficultforamemberofagrouptofindemploymentinaparticularoccupation,hisorherincentivetobetrainedtoenterthatoccupationisreduced.Whichofthetermsbelowismorecloselyassociatedwiththiscondition?aWorkerdiscrimination.bCustomerdiscrimination.cNegativefeedbackloop.dIrrationalexpectations.18Whatisthetermgiventotheapplicationofeconomicanalysistohumanresourceissues?aLaboureconomics.bPersonneleconomics.cHumanresourcemanagement.dOccupationaleconomics.19Whatisthedefinitionofeconomicrent?aThepriceofaresourcewhenthatpriceisstrictlydeterminedbysupply.bThemarginalrevenueproductofnaturalresources.cThepricereceivedbyafactorofproductionthatisinfixedsupply,inexcessofitsopportunitycost.dTheearningsofalandlord.20Whichofthefollowingiscausedbytheexistenceofafirmwithamonopsonyinthelabourmarket?aMoreworkerswillbehiredathigherwages.bMoreworkerswillbehiredatlowerwages.cFewerworkerswillbehiredathigherwages.dFewerworkerswillbehiredatlowerwages.191Chapter12ShortAnswerQuestions1.IntheUS,universityprofessorsindifferentdisciplinesoftengetpaiddifferentamounts.Forexample,aprofessorintheDepartmentofForeignLanguagesataMidwesterncollegecomplainedthathissalaryismuchlessthananaccountingprofessoratthesameinstitution.BothprofessorshavePh.D.degrees,20yearsofteachingexperienceandsimilarresearchrecords.Isthisdifferenceinsalaryduetoacompensatingdifferential,economicdiscriminationorsomeotherfactor?2.Between2005and2010,membersofthe“babyboom”generationwillbegintoreachretirementage(over62years.HowwillthisaffectthelabourmarketinAustralia?3.Clergymenandclergywomen(ministers,rabbis,priests,etc.worklonghoursandprovideservicestopeopleattimesofpersonalstresssuchasillness,death,andmarriageproblems.Economicreasoningwouldsuggestthattoattractpeopletotheseprofessions,acompensatingdifferentialwouldbeneeded.ButeconomistDanielHamermeshestimatedthatmaleclergyintheUnitedStatesearnlessthan60percentoftheincomeearnedbyotherwiseidenticalworkers.Howcanthisbeexplained?4.MakingtheConnection12.1onpage378notestheincomedifferentialsforpeoplewithandwithoutauniversitydegree.Isthissimplyacaseofuniversitygraduateslearningskillsthatraisetheirproductivityandhencetheirwage?True/FalseQuestionsTFTFTFTFTFTFTFTFTFTF..9.Thepricereceivedbyafactorofproductionthathasaperfectlyinelasticsupplycurveiscalledaneconomicrent.Economistsrefertothewagepremiumpaidtothosewhoworkindangerousorunpleasantjobshazardpay.Ifthepriceofwidgetsincreases,thedemandforwidgetworkerswillshifttotheright.Leisureisanormalgood.Therefore,aswagesincrease,thesubstitutioneffectwillcauseaworkertodevotelesstimetoworkandmoretimetoleisure.Salariespaidtomoviestarstodayaregreaterthansalariespaidtomoviestarsofthe1930sand1940smainlybecauseofadvancesintechnology.Anincreaseinthewageratecausesanincreaseinthedemandforlabour.Purerentisanothernameforeconomicrent.Compensatingdifferentialsexplainwhycollegegraduatesreceiveincomeshigherthanincomesofotherworkerswhoare25yearsofageandolder.Ifthedeman