Microeconomics

1.     The employees at Warren Manufacturing Company are unionized. As minimum requirements, the union members insist on keeping a work force of at least 300 workers, and accepting an hourly wage rate of no less than $8. Beyond those minimum requirements, however, they are considering some different economic goals. Calculated on an hourly basis, the employees’ marginal revenue product schedule is:

                                                  Employees         MRP

                                                         100                  $20

                                                         200                    18

                                                         300                    16

                                                         400                    14

                                                         450                    13

                                                         500                    12

                                                         550                    11

                                                         600                    10

                                                         650                      9

                                                         700                      8

                                                         800                      6

                                                         900                      4

            a)  If the union attempts to maximize the wage rate of its employees, subject to the above constraints, what wage rate and employment level can it expect to achieve?

            b)  If the union attempts to maximize the employment of its members at Warren, what wage rate and employment level can it expect to achieve?

3.     How much choice do you expect to have in your working lifetime between leisure and labor? What factors will influence your choice?