Labor Economics (mod 3 SLP)
Module 3 - Background
DEMAND: UTILITY AND MARGINALITY
We will examine the labor market in this module. The demand and supply curves determine the wage and quantity of labor in each market. You will also review the concept of marginal productivity.
Required Reading
Bouman, John. () Principles of Microeconomics. "Unit 4: Business Production Behavior" (Sections 1-4 only) Retrieved from:http://www(dot)inflateyourmind(dot)com/pdfs/microeconomics.pdf
Rittenberg Libby and T. Tregarthen. (2009). Chapter 12: Wages and Employment in Perfect Competition. Sections 1-4. Retrieved from: http://www(dot)web-books(dot)com/eLibrary/NC/B0/B63/TOC.html
SLP Readings
Boaz, David. Reporting the Minimum Wage. Cato Institute. Retrieved from: http://www(dot)cato-at-liberty(dot)org/reporting-the-minimum-wage/
Filion, Kai (2009) Minimum Wage Issue Guide. Economic Policy Institute. Retrieved from:http://www(dot)epi(dot)org/publication/issue_guide_on_minimum_wage/
Course Handout
A Short Lesson on Marginal Productivity
Note: All readings were validated on March 17, 2013.
Module 3 – SLP Assignment
DEMAND: UTILITY AND MARGINALITY
The Labor Market
Most firms require labor to produce output. The number of workers to hire is often an important decision of the firm because it affects the costs and profits of the firm. Write a to 3-page paper on the following issues:
- Suppose you are the manager of the firm. What advice would you give the owners to raise the productivity of its labor? Be specific in your proposal.
- What if the government raised the minimum wage. How would this policy effect your firm?
- Use the readings from the background page. In general, do you think the government should intervene in the market?
SLP Assignment Expectations
Use concepts from the modular background readings as well as any good-quality resources you can find. Please be sure to cite all sources within the text and a reference list at the end of the paper.
Length: 3 pages double-spaced and typed.
The following items will be assessed in particular:
- Your ability to examine the labor market in a particular firm.
- Some in-text references to the modular background readings (APA formatting not required).
- The essay should address each element of the assignment. Remember to support your answers with solid references.
Upload your paper when it is done.
Answer the following question highlighted in the green text this should go under the references page of the paper please give more than a 3 sentence reply upload when complete
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Explain the law of diminishing returns in your own words. Give two examples that illustrates the principle. One should be related to consumption and the other should focus on production. Please do not repeat an example that has already been posted. |
Upload your paper when it is done.
ANSWER THE FOLLOWING QUIESTION AFTER THIS ESSAY IS COMPLETE PLEASE ENSURE YOU HAVE A MINIUM OF 5 SENTENCES. These questions should be answer after the References .
LAST
Explain the law of diminishing returns in your own words. Give two examples that illustrates the principle. One should be related to consumption and the other should focus on production.
Labor Economics
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Labor Economics
Q1. Labor productivity
Every firm aims at minimizing costs and maximizing profits, a firm should therefore be able to effectively manage its labor resources. This is the effective and efficient utilization of human resources with the aim of achieving the organization’s goals and objectives. The firm should be able to identify its labor requirements and utilize them in a way that attains optimal marginal productivity. A high marginal productivity in a firm measures the efficiency of the labor force, it lowers the average costs of operations of the firm, improves the firm’s competitiveness in the industry and trade performance leading to increased profits (Libby &Tregarthen 2009). A firm should therefore seek to improve the productivity of its labor force; this can be done through various approaches which can be used simultaneously for better outcomes.
Firstly the firm should offer fair remuneration to all the workers. Differences in wages may be brought about by different levels of education among the workers, a college trained worker should not be paid the same as a high school trained worker The years of experience of each employee can also determine the level of wages paid; there are also factors like minimum wages set by the government, wage rates being offered by other firms in the industry for similar work. Secondly, the firm should offer incentive programs to empower their employees. For instance offering extra rewards for outstanding performance of the employees will motivate them to put in some extra effort all times so that they can win the reward. The firm can also carry out employee training programs to improve their expertise in a certain area. This also minimizes delays in their work that may be caused by injuries and or internal conflicts.
Q2. Effects of an increase in minimum wages
There are various ways that a firm can use to determine its wage rates depending on the task being carried out; hours of work, etc. generally the equilibrium wage rate is determined by the intersection of the labor demand and labor supply. However the government usually sets the minimum wage rate that should be offered by the firms in an effort to protect the workers from being exploited by their employers and also to reduce the levels of poverty. An Increase in the minimum wages will add to the cost of the firm (Kai, 2009)Â If the firm is selling its goods at a lower price than the set price ceiling, then these costs can be passed to the consumer by raising the prices of the product. This will lead to increased consumer spending, which can raise the growth potential of the firm and is also good for the economy. A firm can therefore raise the wages of their emplo...