C and Row for 'G' are most important.
Posted: Sun May 29, 2022 7:27 pm
C and Row for 'G' are most important.
W A B 'A' A" C' W₂ D₁ E Figure 14.6 Efficient and Inefficient Wage-Employment Contracts Wage-employment contracts on the labour demand curve are inefficient. For example, compared to the point A on the labour demand curve, both parties are better off at point A', which yields higher union utility and higher firm profits. The set of Pareto-efficient wage-employment contracts, called the contract curve and shown as CC', is the locus of points at which a union indifference curve is tangent to a firm isoprofit curve. Because the union indifference curves are downward sloping, this set of tangencies must occur to the right of the labour demand curve, where the firm isoprofit curves are also downward sloping.
Refer to Figure 14.6 in the textbook. Let "G" be the point on the demand curve at the alternative wage. A. In this figure, the monopoly union outcome is at point . Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. B. Suppose the middle isoprofit curve depicted gives the firm zero profits. The upper end of the bargaining range in the right-to-manage model will be the wage at point ]. The lower end of the bargaining range will be the wage at point ]. Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. C. Suppose the highest isoprofit curve depicted gives the firm positive profits. In the right-to-manage model, the upper end of the bargaining range will be the wage at point . The lower end of the bargaining range will be the wage at point .Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. D. Complete the chart. Enter "1" for yes, and "-1" for no. Is the contract Pareto Efficient? a Pareto a Pareto improvement improvement over B? over A? a Pareto a Pareto a Pareto improvement improvement improvement over A'? over A"? over G? G n/a n/a n/a n/a n/a A A' A" B
- C And Row For G Are Most Important 1 (334.34 KiB) Viewed 15 times
Refer to Figure 14.6 in the textbook. Let "G" be the point on the demand curve at the alternative wage. A. In this figure, the monopoly union outcome is at point . Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. B. Suppose the middle isoprofit curve depicted gives the firm zero profits. The upper end of the bargaining range in the right-to-manage model will be the wage at point ]. The lower end of the bargaining range will be the wage at point ]. Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. C. Suppose the highest isoprofit curve depicted gives the firm positive profits. In the right-to-manage model, the upper end of the bargaining range will be the wage at point . The lower end of the bargaining range will be the wage at point .Enter "1" for A, "2" for A", "3" for A", "4" for B and "5" for G. D. Complete the chart. Enter "1" for yes, and "-1" for no. Is the contract Pareto Efficient? a Pareto a Pareto improvement improvement over B? over A? a Pareto a Pareto a Pareto improvement improvement improvement over A'? over A"? over G? G n/a n/a n/a n/a n/a A A' A" B