Answer the following questions using examples and applications from the readings

Question

Answer the following questions using examples and applications from the readings. Justify your answers using economic concepts and ideas as they apply. Each response should be between 100-200 words. Questions: 1.The demand for labor is said to be a “derived” demand. What is the meaning of a derived demand? How does this concept help to determine the demand for labor? 2.What are some of the factors that determine the supply of labor in a market? What significant factors have changed the supply of labor over the last twenty years? 3. How does a firm determine its prices and the quantity of labor required in the resource market during a specific period? 4. Why do income inequalities exist? How are income inequalities measured? How have income inequalities changed from 1980 to the present? 5.What is the role of the U.S. government, in terms of dealing with the problem of income inequalities? What are the arguments, for and against, government involvement in this area? 6.Why do nations trade? What is meant by the concept of “Comparative Advantage”? Could a nation be better off economically, if it practiced an isolation policy? 7.The United States has had a significant trade imbalance for several years. What are the problems associated with having a negative trade balance? What can be done to correct the imbalance? 8.How are exchange rates determined? What is the significance of currency devaluations to the home country? To other countries?

Explanation / Answer

1 ) In social science, derived demand is demand for an element of production or intermediate smart that happens as a results of the demand for an additional intermediate or final smart. In essence, the demand for one depends thereon whose demand its demand comes from. for instance, if the demand for a decent like wheat will increase, then this ends up in a rise within the demand for labor. for an additional example, demand for steel ends up in derived demand for steel employees, as steel employees area unit necessary for the assembly of steel. because the demand for steel will increase, therefore will its value. the rise in value suggests that makers of steel will gain a lot of in revenue if they manufacture a lot of steel, so resulting in the next demand for the resources concerned in manufacturing steel.

Demand for transport is another model of derived demand, as users of transport area unit fairly often intense the service not as a result of they take pleasure in consumption directly (except in cases like pleasure cruises), however as a result of they need to partake in alternative consumption elsewhere.

Derived demand applies to each customers and producers. Producers have a derived demand for workers. the workers themselves don't seem within the employer's utility function; rather, they allow employers to profit by fulfilling the demand by customers for his or her product. Clearly, the demand for labour may be a derived demand from the demand for product and services.

This is almost like the construct of joint demand or complementary demand , that the number consumed of 1 of them relying absolutely on the number of the opposite consumed
The demand for labor comes demand.
There is no demand for labor aside from the demand for the products and services labor will manufacture.
Employers area unit the demanders parturient markets.
Workers area unit the suppliers parturient markets.
Wages (the “price” of labor generated by the interaction of employers’ demand and workers’ provide parturient markets) area unit a cost within the markets for the products or services labor is employed to supply.
The quantity equipped of those product and services is decided by marginal production prices.
The availability of substitutes for labor will affects wages and employment.
When demand for associate degree output smart or service decreases, total labor financial gain within the affected business can decrease.
As demand for the nice decreases, demand for labor should additionally decrease. attainable results include:
Workers area unit arranged off;
Workers’ hours area unit cut;
Workers’ wages area unit reduced.
The magnitude of the impact on individuals’ financial gain depends on the alternatives obtainable to employees in alternative employment.
An increase in demand for associate degree output smart that generates a positive impact on business revenue additionally will increase total labor financial gain, the latter by increasing the demand for labor.

2 )

Key factors touching labour provide

1.The real wage rate on supply within the trade itself – higher wages raise the prospect of hyperbolic issue rewards and will boost the amount of individuals willing and ready to work

2.Overtime: Opportunities to spice up earnings come back through overtime payments, productivity-related pay schemes, and share possibility schemes

3.Substitute occupations: the $64000 wage rate on supply in competitive jobs affects the wages and the earnings differential that exists between 2 or a lot of occupations. as an example a rise within the earnings out there to trained plumbers and electricians might cause some folks to modify their jobs

4. Barriers to entry: Artificial limits to Associate in Nursing industry's labour provide (e.g. through the introduction of minimum entry requirements) will limit labour provide and force pay levels higher – this can be the case in professions like legal services and medication wherever there are strict "entry criteria"

5.Improvements within the activity quality of labour: as an example if a lot of folks are trained with the {required|the mandatory} skills required to figure during a specific occupation.

6.Non-monetary characteristics of specific jobs – embrace factors like the danger with totally different jobs, the need to figure anti-social hours or the non-pecuniary edges that sure jobs give as well as job security, operating conditions, opportunities for promotion and also the probability to measure and work overseas, employer-provided in-work coaching, employer-provided or supported health and leisure facilities and alternative in-work edges as well as activity pension schemes.

7.Net migration of labour – the united kingdom may be a member of the ecu Union single market that enshrines free movement of labour united of its guiding principles. A rising flow of individuals seeking add the united kingdom is creating labour migration a vital think about determinant the provision of labour out there to several industries – be it to alleviate shortages of expert labour within the NHS or education, or to satisfy the seasonal demand for employees in agriculture and also the housing industry.

The u. s. is experiencing the best wave of immigration in its history. By 1994, there have been twenty two.6 million immigrants within the U.S., per the agency, twenty % of them having arrived within the past 5 years. Nearly one in eleven folks living within the U.S. was born in other places, nearly double the proportion in 1970 and also the highest level since before warfare II.

In addition to inflicting over a 3rd of U.S. increment (37 % in 1994), immigration is skewing the state toward a low-skilled, poorly educated force. though several of the foreign born have school educations, Associate in Nursing sinister range of others ar ill-prepared to contend during a fashionable economy, with immigrants over doubly as probably as native Americans to be highschool dropouts.

The hyperbolic competition from immigrants for low-skilled jobs has come back at Associate in Nursing wrong time. The u. s. market has undergone major changes over the past thirty years. The demand for labor has modified owing to technological innovation, hyperbolic international competition, and changes in client outlay, among alternative reasons. producing employment is in decline, whereas low-paying service occupations expand.

To explore, if not answer, these queries, the middle for Immigration Studies and also the Center for Public Policy and modern problems sponsored a November. 1, 1994 gathering of fifteen consultants representing a range of disciplines, as well as economic science, demography, geography, social problems, and development. though there have been important variations in stress, there was some broad agreement concerning the economic impact of immigration on Americans with low levels of ability and education.

3 )

A firm make sure its prices and thus quantity|the quantity|the number} of labor required at intervals the resource market throughout a selected amount

The corporations World Health Organization sold merchandise and services at intervals the unit on supply and demand presently become the patrons at intervals the market. firms need workers to make merchandise, vogue those merchandise, package them, sell them, advertise for them, ship them, and distribute them, among different tasks. No worker will do this without charge, and so firms ought to enter into the market and acquire labor. firms make sure amount|the number|the amount} of labor that they demand per several considerations: what quantity the labor will price (as pictured by the market wage), and also the approach plenty of they feel they need, plenty of at intervals the style that patrons at intervals the merchandise and services market get per the value and their own wishes.

Marginal Revenue Product

Firms square measure willing to buy for labor up to the aim where the marginal revenue product of labor is up to the market wage. what's going to this mean? The marginal revenue product is that the additional revenue a firm generates once they get an extra unit of input (in this case, the input is labor: a unit of labor isn't a fresh employee, it's Associate in Nursingother unit of work; associate degree example would be an extra hour of work). As long as a result of the gain generated by additional hours of labor balances (or exceeds) the wages procured those additional hours of labor, firms square measure willing to buy further labor.

If the marginal revenue product (MRP) of labor is up to the market wage, the companies square measure at their optimum purpose of labor consumption, since buying further labor would mean that the MRP could be a smaller quantity than the wage, and buying less labor would mean that the MRP is larger than the wage. If the marginal revenue product of labor could be a smaller quantity than the market wage, then the companies square measure exploitation associate degree excessive quantity of labor, and other people firms will altogether chance deflate on the hours they get until the MRP of labor is up to the wage.

MRP > w : The firm will get further labor
MRP = w : The firm is buying the right amount of labor
MRP < w : The firm is buying associate degree excessive quantity of labor

4 )

Economic difference is that the distinction found in numerous measures of economic well-being among people in a very cluster, among teams in a very population, or among countries. Economic difference is usually referred to as financial gain difference, wealth difference, or the wealth gap. Economists usually specialize in economic inequality in 3 metrics: wealth, income, and consumption. the problem of economic difference has relevancy to notions of equity, equality of outcome, and equality of chance.

Economic difference varies between societies, historical periods, economic structures and systems. The term will seek advice from cross-sectional distribution of financial gain or wealth at any specific amount, or to changes of financial gain and wealth over longer periods of your time. There ar numerous numerical indices for measurement economic difference. A wide used index is that the Gini constant, however there are several different ways.

Some studies say economic difference could be a social downside. E.g., an excessive amount of difference is damaging, as a result of it would hinder long run growth. an excessive amount of financial gain equality is additionally damaging since it decreases the motivation for productivity and therefore the need to take-on risks and make wealth.
There ar several reasons for economic difference inside societies. Recent growth in overall financial gain difference, a minimum of inside the OECD countries, has been driven principally by increasing difference in wages and salaries.

Economist Thomas Piketty, UN agency focuses on the study of economic difference, argues that widening economic inequality is AN inevitable development of free market market economy once the speed of come of capital (r) is bigger than the speed of growth of the economy (g).

Common factors that impact economic difference include:

labor market outcomes economic process, by:suppressing wages in low-skill jobs attributable to a surplus of low-skill labor in developing countries increasing the market size and therefore the rewards for folks and corporations succeeding in a very specific niche providing additional investment opportunities for already-wealthy folks increasing international influence
decreasing domestic influence policy reforms extra-legal possession of property (real estate and business),more regressive taxation,plutocracy automation, automation and redoubled technology,which means additional skills are needed to get a moderate or high wage for the ethnic discrimination, gender discrimination, variation in aptitude,neoliberalism,Growing acceptance of terribly high CEO salaries, e.g. within the u. s. since the Sixties

measurement of financial gain difference
Income difference metrics or financial gain distribution metrics ar employed by social scientists to live the distribution of financial gain, and economic difference among the participants in a very specific economy, like that of a selected country or of the globe normally. whereas completely different theories might try and make a case for however financial gain difference comes concerning, financial gain difference metrics merely give a system of mensuration accustomed verify the dispersion of incomes. The conception of difference is distinct from impoverishment and fairness.

Income distribution has continually been a central concern of theory and policy. Classical economists like Smith, Malthus and economist were primarily involved with issue financial gain distribution, that is, the distribution of financial gain between the most factors of production, land, labour and capital. it's usually associated with wealth distribution though separate factors influence wealth difference.

Modern economists have additionally self-addressed this issue, however are additional involved with the distribution of financial gain across people and households. necessary theoretical and policy issues embrace the link between financial gain difference and economic process.

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