Is the United States' labor supply more inelastic or more elastic? Briefly summarize the competing theories
Some labor economists believe that most workers work full time regardless of their wages. Hence, these economists believe that labor supply is more inelastic.
Other labor economists believe that labor supply is more elastics because of the following reasons:
*Many workers can adjust the number of hours that they work. Some people have a choice about working overtime, for example.
*Some workers are the second earner in their families. They may choose to work part time in the work place in order to spend more time at home. They may respond to higher wages by entering the work force, thus working more hours.
*Some older workers can choose when to retire, and once retired, they may choose to work part time.
*Some people engage in economic activity that is a part of the underground economy. These people will adjust whether they work in legitimate jobs or as a part of the underground economy based on wages.
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Which of the following statements is true?
A) Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops. B) France is the leading exporting country, accounting for 10 percent of total world exports. C) Japan is more dependent on foreign trade than is the United States. D) Imports and exports account for over one-half of the GDP of Belgium.
Refer to Figure 15-11. Suppose the local government imposes a $2.50 per month tax on cable companies. What happens to the price charged by the cable company following the imposition of this tax?
A) The price rises from PM but it increases by an amount greater than $2.50 to reflect the monopoly's markup. B) The price remains at PM. C) The price rises from PM but it increases by an amount less than $2.50. D) The price rises from PM to (PM + $2.50).