UTK ECON 211 EXAM 4 2024
Competitive Labor Markets ️- similar to competitive product markets -many buyers and sellers - a homogeneous product - easy entry and exit - workers are regarded as equally productive - information is widely available and accurate
Supply of Labor ️the time an indiv...
UTK ECON 211 EXAM 4 2024
Competitive Labor Markets ✔️- similar to competitive product markets
-many buyers and sellers
- a homogeneous product
- easy entry and exit
- workers are regarded as equally productive
- information is widely available and accurate
Supply of Labor ✔️the time an individual is willing to work at various wage rates
"Income" Effect ✔️- dominates substitution effect at higher wages
- workers choose fewer hours when wages rise
- and more hours when wages fall
"Substitution" Effect ✔️- dominates income effect at lower wages
- workers choose more hours as wages rise (opportunity cost of leisure rises)
Market Labor Supply Curve ✔️- positively sloped
- higher wages attract more workers
Causes for Shifts in Labor Supply ✔️- demographic changes (population, labor force participation rate)
- nonwage aspects of jobs (safety, flexibility)
- wages in alternative jobs (move to industry with higher wage)
- nonwage income (stocks, rental properties, interest, inheritance, etc. FIRE = financial independence
retire early)
Economic Discrimination ✔️- workers of equal ability and productivity are paid different wages or are
otherwise discriminated against
- result: members of different groups are segregated into different occupations
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