平狄克微观经济学第六版第十四章课后答案解析.docx
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平狄克微观经济学第六版第十四章课后答案解析
CHAPTER14
MARKETSFORFACTORINPUTS
TEACHINGNOTES
Thefollowingtwochaptersexaminethemarketsforlaborandcapital.Althoughthediscussioninthischapterisgeneral,mostoftheexamplesrefertolaborastheonlyvariableinputtoproduction,withtheexceptionofExample14.1,whichdiscusses“TheDemandforJetFuel”byairlines.Labordemandandsupplyarediscussedinthefirstsection,andthecompetitivefactormarketequilibriumandeconomicrentarediscussedinthesecondsection.Section14.3exploresthefactormarketstructureforthecasewherethebuyerhasmonopsonypower,andsection14.4exploresthecaseofmonopolypoweronthepartofthesellerofthefactor.
AnunderstandingofthischapterreliesonconceptsfromChapters4through8and10.IfyouhavejustcoveredChapters11-13,youmightbeginbyreviewingmarginalproduct,marginalrevenue,andcostminimization.Youshouldthendiscussmarginalrevenueproductandtheprofit-maximizingconditionMRPL=w.ExplainwhyweareonlyinterestedintheportionoftheMPcurvebelowtheaverageproductcurve(thedownward-slopingportion).Thederivationofthefirm’sdemandcurveforlaborisstraightforwardwhenlaboristheonlyfactor,butbecomesmorecomplicatedwhenthereareseveralvariableinputs.Inparticular,youmightexplainwhytheMRPLcurveshiftsasthefirmsubstitutesoneinputforanotherinproductioninresponsetoapricechangebynotingthattheMRPLcurveisdrawnforafixedleveloftheothervariableinput.
Whenpresentingthemarketlabordemandcurve,explainthatsincetheinputpriceschangeasmoreinputsaredemanded,themarketdemandcurveisnotsimplythesummationofindividualdemandcurves.Youcanextendthepresentationofpriceelasticityofinputdemand(seeExample14.1)bydiscussingtheconditionsleadingtopricesensitivity.Elasticityisgreater
(1)whentheelasticityofdemandfortheproductishigher,
(2)whenitiseasytosubstituteoneinputforanother,and(3)whentheelasticityofsupplyishigherforotherinputs.Elasticityofsupply,whichwasdiscussedinChapter2,isreintroducedinExample14.2.Youshouldalsodistinguishbetweenshort-runandlong-runelasticity(seeFigure14.6).
Ifyouhavealreadycoveredsubstitutionandincomeeffects,thestudentswillbereadyforthederivationofthebackward-bendingsupplycurveforlabor.AlthoughFigure14.9isastraightforwardapplicationofthesetools,studentsareoftenconfusedbytheplottingofincomeagainstleisure.Pointoutthatthisisjustanothertypeofutilitymaximizationproblemwherethetwogoodsareleisureandincome.Incomecanbethoughtofastheconsumptionofgoodsotherthanleisure,inthatmoreincomebuysmoregoods.Youcanalsoimplicitlyassumethatthepriceofothergoodsis$1andthepriceofleisureisthewage.Thesupplyoflaborcurveisderivedbychangingthewageandfindingthenewlevelofhoursworked.Anindividual’ssupplycurveoflaborisbackwardbendingonlywhentheincomeeffectdominatesthesubstitutioneffectandleisureisanormalgood.ShowtypicalsupplycurvesforeachgroupinTable14.2.Foranexperimentalstudyofthelabor-leisuretrade-offseeBattalio,Green,andKagel,“Income-LeisureTradeoffofAnimalWorkers,”AmericanEconomicReview(September1981).
Section14.2bringstogetherlabordemandandsupplyforbothcompetitiveandmonopolisticproductmarkets.AlthougheconomicrentwaspresentedinChapter8,itisreintroducedwithmoredetailhere.InSection14.3,carefullyexplainwhythemarginalexpenditurecurveisabovetheaverageexpenditurecurveforamonopsonist(seeFigure14.14).Youcandiscusshowamonopsonistwouldpricediscriminate,e.g.,payadifferentwageratetoeachemployee.Withperfectpricediscrimination,themarginalrevenueexpenditurecurvewouldcoincidewiththeaverageexpenditurecurve.Althoughmonopsonyexistsinsomemarkets,theexerciseofmonopsonypowerisrarebecauseoffactormobility.However,theemploymentofathletesbytheownersofprofessionalteamsprovidesagoodexample(seeExample14.4“MonopsonyPowerintheMarketforBaseballPlayers”).Onthissametopic,seeSommersandQuinton,“PayandPerformanceinMajorLeagueBaseball:
TheCaseoftheFirstFamilyofFreeAgents,”JournalofHumanResources(Summer1982).Section14.4discussesthecaseofunionstoexploremonopolypoweronthepartoftheselleroftheinput.
REVIEWQUESTIONS
1.Whyisafirm’sdemandforlaborcurvemoreinelasticwhenthefirmhasmonopolypowerintheoutputmarketthanwhenthefirmisproducingcompetitively?
Thefirm’sdemandcurveforlaborisdeterminedbytheincrementalrevenuefromhiringanadditionalunitoflaborknownasthemarginalrevenueproductoflabor:
MRPL=(MPL)(MR),theadditionaloutput(“product”)thatthelastworkerproduced,timestheadditionalrevenueearnedbysellingthatoutput.Inacompetitiveindustry,themarginalrevenuecurveisperfectlyelasticandequaltoprice.Foramonopolist,marginalrevenueisdownwardsloping.Asmorelaborishiredandmoreoutputisproduced,themonopolistwillchargealowerpriceandmarginalrevenuewilldiminish.Allelsethesame,marginalrevenueproductwillbesmallerforthemonopolist.Thisimpliesthatthemarginalrevenueproductforthemonopolistismoreinelasticthanforthecompetitivefirm.
2.Whymightalaborsupplycurvebebackwardbending?
Abackward-bendingsupplycurveforlabormayoccurwhentheincomeeffectofanincreaseinthewageratedominatesthesubstitutioneffect.Laborsupplydecisionsaremadebyindividualschoosingthemostsatisfyingcombinationofworkandother(leisure)activities.Withalargerincome,theindividualcanaffordtoworkfewerhours:
theincomeeffect.Asthewagerateincreases,thevalueofleisuretime(theopportunitycostofleisure)increases,thusinducingtheindividualtoworklongerhours:
thesubstitutioneffect.Becausethetwoeffectsworkinoppositedirections,theshapeofanindividual’slaborsupplycurvedependsontheindividual’spreferencesforincome,consumption,andleisure.
3.Howisacomputercompany’sdemandforcomputerprogrammersaderiveddemand?
Acomputercompany’sdemandforinputs,includingprogrammers,dependsonhowmanycomputersitsells.Thefirm’sdemandforprogramminglabordependson(isderivedfrom)thedemanditfacesinitsmarketforcomputers.Asdemandforcomputersshifts,thedemandforprogrammersshifts.
4.Comparethehiringchoicesofamonopsonisticandacompetitiveemployerofworkers.Whichwillhiremoreworkers,andwhichwillpaythehigherwages?
Explain.
Sincethedecisiontohireanotherworkermeansthemonopsonistmustpayahigherwageforallworkers,andnotjustthelastworkerhired,itsmarginalexpenditurecurveliesabovetheinputsupplycurve(theaverageexpenditurecurve).Themonopsonist’sprofit-maximizinginputdemand,wherethemarginalexpenditurecurveintersectsthemarginalrevenueproductcurve,willbelessthanthecompetitor’sprofit-maximizinginputchoice,wheretheaverageexpenditurecurveintersectsthedemandcurve.Themonopsonisthireslesslabor,andthewagepaidwillbelessthaninacompetitivemarket.
5.Rockmusicianssometimesearnover$1millionperyear.Canyouexplainsuchlargeincomesintermsofeconomicrent?
Economicrentisthedifferencebetweentheactualpaymenttothefactorofproductionandtheminimumamountthatthefactoriswillingtoaccept.Inthiscase,youmightassumethattherearealimitednumberoftop-qualityrockmusicianswhowillcontinuetoplayrockmusicnomatterwhattheyarepaid.Thisresultsinaperfectlyinelasticsupplycurve,orsomethingclosetoit.Giventhehighdemandforrockmusic,thewagewillbeveryhighandtherewillbealotofeconomicrent.Iftherewasalargersupplyoftop-qualityrockmusicians,oramoreelasticsupply,thentheeconomicrentwouldbesmaller.
6.Whathappenstothedemandforoneinputwhentheuseofacomplementaryinputincreases?
Ifthedemandforthecomplementaryinputincreases,thedemandforthegiveninputwillincreaseaswell.Whendemandforthecomplementaryinputincreases,thereisanincreaseinthequantityhiredandpossiblythepricepaid.BothofthesechangeswillincreasetheMRPofthegiveninput,andhencewillincreasethequantityhiredandpossiblythepricepaid.Whetherthepricesoftheinputsincreasesdependsonthedegreeofmonopsonypoweronthepartofthefirm.
7.Foramonopsonist,whatistherelationshipbetweenthesupplyofaninputandthemarginalexpenditureonit?
Thedecisiontoincreaseemploymentmeansthemonopsonistmustpayallunitsthehigherprice,andnotjustthelastunithired.Therefore,itsmarginalexpenditurecurveliesabovetheinputsupplycurve(theaverageexpenditurecurve).Hiringmorelaborwillincreasethemarginalexpenditure,whichwillincreasetheaverageexpenditure.Iftheaverageexpenditureisincreasing,thenthemarginalexpendituremustbegreaterthantheaverageexpenditure.
8.CurrentlytheNationalFootballLeaguehasasystemfordraftingcollegeplayersbywhicheachplayerispickedbyonlyoneteam.Theplayermustsignwiththatteamornotplayintheleague.Whatwouldhappentothewagesofnewlydraftedandmoreexperiencedfootballplayersifthedraftsystemwererepealed,andallteamscouldcompeteforcollegeplayers?
TheNationalFootballLeaguedraftandreserveclause(aprimaryissueinthe1987-1988season’sstrike)createsamonopsonistcartelamongtheownersofNFLteams.Ifthedraftsystemwererepealed,competitionamongteamswouldincreasewagesoffootballplayerstothepointwherethemarginalreven