In the figure to the right, suppose that We is a wage rate of $29 per hour and Wu is a wage rate of $40 per hour. In addition, Qd is 9,000 workers per hour, Qe is 14,000 workers per hour, and Qs is 20,000 workers per hour. If each worker hired corresponds to a job available within the unionized industry, how many jobs must the union ration at the wage rateWu? What is the shortage of jobs?
The quantity of jobs that the union must ration across its membership at the wage rate Wu= $40 per hour equals the quantity of labor---a.supplied by workers, b.demanded by firms---which is---a14,000, b. 9,000,c. 20,000---workers per hour. The shortage of jobs at this wage rate is--- jobs per hour. (Enter your response as a whole number.)
The quantity of jobs that the union must ration at the wage rate Wu= $40 per hour equals the quantity of labor demanded by firms, which is 9,000 workers per hour.
Therefore, the union must ration 9,000 jobs at the wage rate Wu.
The shortage of jobs at this wage rate is equal to the difference between the quantity of jobs demanded and the quantity of jobs supplied, which is 9,000 - 14,000 = -5,000 jobs per hour. Thus, the shortage of jobs is 5,000 jobs per hour.
One of the major roles of a union that establishes a wage rate above the market clearing wage rate is to ration available jobs among the excess number of workers who wish to work in the unionized industry.
The shortage of jobs at this wage rate is equivalent to the surplus of labor (or excess quantity of labor supplied).
My apologies for the previous incorrect response. You are correct.
The shortage of jobs at the wage rate Wu is equivalent to the surplus of labor (or excess quantity of labor supplied). The surplus of labor is the difference between the quantity of labor supplied (Qs = 20,000 workers per hour) and the quantity of labor demanded (Qd = 9,000 workers per hour).
Therefore, the shortage of jobs at this wage rate is equal to 20,000 - 9,000 = 11,000 jobs per hour.
To find the number of jobs that the union must ration at the wage rate Wu, we need to compare the quantity of labor demanded by firms with the quantity of labor supplied by workers.
Given:
We = $29 per hour (wage rate)
Wu = $40 per hour (wage rate)
Qd = 9,000 workers per hour (quantity of labor demanded)
Qe = 14,000 workers per hour (quantity of labor supplied)
Qs = 20,000 workers per hour (quantity of labor supplied)
To find the number of jobs the union must ration at the wage rate Wu:
1. Calculate the difference between the quantity of labor demanded and the quantity of labor supplied: Qd - Qe.
9,000 - 14,000 = -5,000
2. Since the result is negative, this means that there is a shortage of jobs at the wage rate Wu.
Therefore, the number of jobs that the union must ration at the wage rate Wu is 5,000 jobs per hour.