Scribd Logo
Upload

Welcome to Scribd!

  • 88 views

    Ec 431 - 2007

    Uploaded by

    MASMO SHIYALA
    This document contains an economics exam for a labor economics course at the University of Zambia. The exam consists of 4 questions covering topics such as wage determination, the impact of minimum wages, overtime pay policies, and union negotiations. Students are instructed to answer all 4 questions in the allotted 2 hours.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Ec 431 - 2007

    Uploaded by

    MASMO SHIYALA
    88 views3 pages
    This document contains an economics exam for a labor economics course at the University of Zambia. The exam consists of 4 questions covering topics such as wage determination, the impact of minimum wages, overtime pay policies, and union negotiations. Students are instructed to answer all 4 questions in the allotted 2 hours.

    Original Description:

    Kindly solve these questions and share some solutions

    Original Title

    EC 431 - 2007

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document contains an economics exam for a labor economics course at the University of Zambia. The exam consists of 4 questions covering topics such as wage determination, the impact of minimum wages, overtime pay policies, and union negotiations. Students are instructed to answer all 4 questions in the allotted 2 hours.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    88 views3 pages

    Ec 431 - 2007

    Uploaded by

    MASMO SHIYALA
    This document contains an economics exam for a labor economics course at the University of Zambia. The exam consists of 4 questions covering topics such as wage determination, the impact of minimum wages, overtime pay policies, and union negotiations. Students are instructed to answer all 4 questions in the allotted 2 hours.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    THE UNIVERSITY OF ZAMBIA

    SCHOOL OF HUMANITIES AND SOCIAL SCIENCES

    2007 ACADEMIC YEAR FIRST SEMESTER


    FINAL EXAMINATIONS

    EC 431: LABOR ECONOMICS

    TIME: TWO (2) HOURS

    INSTRUCTIONS: ANSWER ALL (4) QUESTIONS

    Question 1

    a) A firm is considering adopting a plan in which the company pays employees


    less than their MRPL early in their careers and more than their MRPL late in
    their careers. For a typical worker at the firm, MRPL = 10 + 0.1T, where T =
    number of years that the worker has been employed at the firm and MRPL is
    measured in dollars per hour. The workers wage per hour is W = 8 + 0.2T.
    Assume that this wage is high enough to attract workers from alternative jobs,
    that the discount rate for a firm is zero, and that the expected tenure of a
    typical worker is 35 years. If workers retire after 35 years, will this plan be
    profitable for a firm? Explain. For how many years will the firm underpay its
    workers?

    b) “Wages in Indian firms were so low that they have no relationship with
    worker productivity.” Comment on this statement using the principles of
    profit maximization.

    c) “Working in an explosive manufacturing company is dangerous to workers’


    health and safety. You heard how some graduates died in a blast some few
    years ago. Therefore, the government should establish and enforce a policy of
    rigid safety and health standards.” (True/False/Uncertain). Briefly explain
    your answer.

    Question 2

    Suppose the demand for pizza at fast food restraunts in a small city is
    LD = 300-20W

    where L = number of pizzas and W = the wage in dollars per hour. The equilibrium wage
    is $4 per hour, but government puts in place a minimum wage of $5 per hour.

    a) How does the minimum wage affect employment in these restaurants?

    1
    b) Suppose that in the city above, there is an uncovered sector where
    LS = -100 + 80W
    LD = 300 – 20W

    where the supply is LS and demand is LD before the minimum


    wage is put in place. Suppose that all workers who lose their jobs
    as Pizza makers due to the introduction of the minimum wage seek
    work in the uncovered sector. What happens to wages and
    employment in that sector?

    c) Women receive lower wages, on average than men of equal age. What
    concepts of human capital help to explain this phenomenon? Why does
    this discrepancy between earnings for men and women grow with age?

    Question 3

    When the Zambian labour Act began to mandate paying 50 percent more for overtime
    work, many employers tried to avoid it by cutting hourly pay, so that total pay and hours
    remained the same.

    a) Assuming that this 50 percent overtime pay premium is newly required for
    all work beyond eight hours per day, draw a budget constraint that pictures
    a strategy of cutting hourly pay so that, at the original hours of work, total
    earnings remain the same.

    b) Suppose that an employer initially paid $11 per hour and had a 10-hour
    workday. What hourly wage will the employer offer so that the total pay
    for a 10-hour workday will stay the same?

    c) Will employees who used to work 10 hours per day want to work more or
    fewer than 10 hours in the new environment (which includes new wage
    rate and the mandated premium).

    Question 4

    a) Suppose that the employer concession schedule is W = 1+ 0.02S and the


    union resistance curve is W = 5 + 0.02S – 0.01S2, where W = percentage
    wage increase and S = expected strike length in days. Using Hicks simple
    model, dertermine the length of the strike and the percentage wage
    increase.

    b) Suppose the unionized workers in the mines earn $10 per hour and non-

    2
    Unionized workers in the industry earn $8 per hour. What can be said
    about the relative wage advantage of unionized workers and the absolute
    effect of the union on its members’ real wage?

    c) Briefly discuss the constraints that unions face in achieving their


    objectives.

    END OF FINAL EXAMINATION


    ________________________________________________________________________

    You might also like