Unions have generally been far more successful in organizing and raising wages in skilled trades such as carpentry than in unskilled trades. Use the laws of derived demand to explain why
What will be an ideal response?
There are at least two reasons. One is that the elasticity of substitution between skilled workers and other factors of production is low; thus firms cannot substitute some other factor of production if wages rise. Secondly, skilled labor is likely to be a relatively small percentage of total costs, and thus raising wages does not cause a large increase in total costs (which would lead to a reduction in supply, an increase in price, and a decrease in output). Unskilled labor has more substitutes and is likely to be a larger share of costs for firms that employ it, and thus if unions raise wages, firms employ other factors of production, and many workers will be laid off.
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When inflation is high and unexpected,
A) borrowers of money lose and lenders win. B) borrowers of money win and lenders lose. C) both borrowers and lenders of money win. D) both borrowers and lenders of money lose.
If the demand for a good is highly inelastic, a tax on the good
a. places the burden of the tax equally on buyers and sellers b. permits sellers to pass most of the cost increase resulting from the tax on to the consumers of the product c. reduces the profits earned by sellers since they must write the check to pay the tax d. makes the demand more inelastic e. makes the demand more elastic