【正文】 2020 Pearson Education, Inc. Chapter 14 94 Present Discounted Value (PDV) ?Determining the valu。2020 Pearson Education, Inc. Chapter 14 92 Stocks Versus Flows ?Stock ?Capital is a stock measurement ? The amount of plant and equipment a pany owns at a point in time ?Flow ?Variable inputs and outputs are flow measurements ? An amount needed or used per time period 169。2020 Pearson Education, Inc. Chapter 14 90 Topics to be Discussed ?Investment Decisions by Consumers ?Investments in Human Capital ?Intertemporal Production Decisions – Depletable Resources ?How Are Interest Rates Determined? 169。2020 Pearson Education, Inc. Chapter 14 87 Wage Inequality – Have Computers Changed the Labor Market? ?Should you plete a college degree? ?In 2020, college graduates age 25 and over earned nearly $400 more per week than those with only a high school diploma ?This is a real wage increase for college grads and a real wage decrease for high school dropouts pared to 1979 ?Unemployment rate among college grads is four times less than for high school drop outs Chapter 15 Investment, Time and Capital Markets 169。2020 Pearson Education, Inc. Chapter 14 85 Wage Inequality – Have Computers Changed the Labor Market? ?Growth in wages – 1983 to 1993 ?College graduates using puters – 11% ?Nonputer users – less than 4% ?Statistical analysis shows that, overall, the spread of puter technology is responsible for nearly half the increase in relative wages during this period 169。2020 Pearson Education, Inc. Chapter 14 83 Wage Inequality – Have Computers Changed the Labor Market? ?In 1984, % of all workers used puters ?1993 – % ?2020 – % ?For managers and professionals, it was over 80% 169。2020 Pearson Education, Inc. Chapter 14 81 The Decline of Private Sector Unionism ?Explanation ?The unions have been attempting to maximize the individual wage rate instead of total wages paid ?The demand for unionized employees has probably bee increasingly elastic as firms find it easier to substitute capital for skilled labor 169。2020 Pearson Education, Inc. Chapter 14 79 The Decline of Private Sector Unionism ?Observations ?Union membership and monopoly power has been declining ?Initially, during the 1970’s, union wages relative to nonunion wages fell 169。2020 Pearson Education, Inc. Chapter 14 77 Unionized and NonUnionized Workers ? What if union chooses to raise wage above petitive wage w*, to wU ? ? Number of workers hired by the union falls by amount ?LU ? As these workers find employment in nonunion sector, wage rate in that sector adjusts until labor market is in equilibrium ? At new wage rate, wNU, additional numbers hired in sector is ?LNU ?Equals number of workers who left unionized sector 169。2020 Pearson Education, Inc. Chapter 14 75 Factor Markets with Monopoly Power ? Rent maximizing policy can help nonunion workers if they can find nonunion jobs ? If jobs are not available, this could cause too much of a distinction between winners and losers ? Looking back at graph, an alternative objective is to maximize aggregate wages that all union members receive ?This gives L2 and w2 169。2020 Pearson Education, Inc. Chapter 14 73 Monopoly Power of Sellers of Labor ?Rent maximizing bination of wage rate and number of workers is where MR crosses supply ?Price es from the demand curve ?This gives a bination of L1 and w1 ?Shaded area below the demand curve and above the supply curve to the left of L1 is the economic rent that all workers receive 169。2020 Pearson Education, Inc. Chapter 14 71 Monopoly Power of Sellers of Labor ?Is restrictive union worthwhile? ?Yes, if maximizing economic rent is the goal ?The union acts like a monopolist restricting output to maximize profits ?Rent for a union represents the wages earned in excess of opportunity cost ?Union must choose workers so that the marginal cost equals the marginal revenue 169。2020 Pearson Education, Inc. Chapter 14 69 Monopoly Power of Sellers of Labor ?The union’s monopoly power allows it to choose any wage rate and quantity supplied ?If it wanted to maximize number of workers hired, it would choose petitive oute ?If it wanted to obtain higher wages, it would restrict membership to L1 workers to get higher wage w1 ?Those who find jobs are better off. Those without jobs are worse off. 169。2020 Pearson Education, Inc. Chapter 14 67 Factor Markets with Monopoly Power ?Just as buyers of inputs can have monopsony power, sellers of inputs can have monopoly power ?The most important example of monopoly power in factor markets involves labor unions 169。2020 Pearson Education, Inc. Chapter 14 65 Monopsony Power in the Market for Baseball Players ?During 1960’s and 70’s, players’ salaries were far below market value of MP ?If petitive market ?Players receiving $42,000 in 1969 would have instead received a salary of $300,000 in 1969 dollars ?Strike in 1972 followed by lawsuit 169。2020 Pearson Education, Inc. Chapter 14 63 Factor Markets with Monopsony Power ?Examples of Monopsony Power ?Government ? Soldiers ? Missiles ? B2 Bombers ?NASA ? Astronauts ?Company town 169。2020 Pearson Education, Inc. Chapter 14 61 Factor Markets with Monopsony Power ? Since a monopsonist pays the same price for each unit, the supply curve is the average expenditure curve ? Upward sloping, since deciding to buy an extra unit raises price it must pay for all units ? For profit maximizing firm, marginal expenditure curve lies above the average expenditure curve ? Firm must pay all units the higher price, not just last unit hired 169。2020 Pearson Education, Inc. Chapter 14 59 Factor Markets with Monopsony Power ?We showed before that many firms have monopsony buying power ?US automobile panies as buy