1. Maximizing the total wage bil On the following graph, the blue line represent
ID: 1154308 • Letter: 1
Question
1. Maximizing the total wage bil On the following graph, the blue line represents a certain industry's annuallabor demand curve this industry, and they all belong to the industry labor union The union is trying to decide what wage to ask for in upcoming negotiations with re are 300 workers in in this industry Complete the following table by calculating the total wage bill under each contract. ontrac Contract M Contract N Which contract maximizes the total wage bill (that is, the total amount paid to all workers in the industry per year) oContract N Contract M Contract L Which contract ensures employment for all 300 members of the union? Contract M Contract N Contract LExplanation / Answer
ANSWER:
1) Total wage of contract l = quantity of labor * wage rate = 100 * 18,000 = $1,800,000
Total wage of contract m = quantity of labor * wage rate = 200 * 12,000 = $2,400,000
Total wage of contract n = quantity of labor * wage rate = 300 * 6,000 = $1,800,000
2) contract m maximizes the total wage bill as the total wage to all the workers is $2,400,000
3) contract n ensures employment for all the 300 workers as seen from the graph.
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