Competitive Pressures on a Firm's Wage Policy
A language school in Paris employs recent graduates as tutors. To hire its current staff of 40 tutors, it offers a wage of €20 per hour, which is the minimum acceptable wage for the 40th tutor hired. A new, large online tutoring platform begins aggressively recruiting from the same pool of graduates, offering them flexible, remote work. Analyze the likely impact of this new competitor on the Parisian school's ability to retain its current staff and hire new tutors. What specific adjustment must the school make to its wage to maintain its staff of 40 tutors, and why is this adjustment necessary?
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Role of the Reservation Wage Curve in Wage-Setting Decisions
Individual Circumstances as a Cause for Variation in Reservation Wages
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A language school that hires tutors finds that it needs to expand its staff from 20 to 30 tutors to meet increased student demand. Each potential tutor has a different minimum acceptable wage, and to attract more tutors, the school must offer a wage that appeals to individuals with progressively higher minimum wage requirements. What is the most likely direct consequence of the school's decision to increase its number of tutors?
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A language school that hires recent graduates finds that it must offer progressively higher wages to attract more tutors. If the government significantly increases the value of unemployment benefits available to these graduates, the school will likely be able to hire its target number of tutors by offering a lower wage than before.
Competitive Pressures on a Firm's Wage Policy
A language school needs to hire tutors and finds that it must offer progressively higher wages to attract more applicants, as each individual has a different minimum acceptable salary. Match each concept from this hiring model to its correct description.
A language school determines the hourly wage it needs to offer to attract a specific number of tutors. The school pays all tutors the same wage, which must be high enough to meet the minimum requirement of the last tutor hired. The relationship is shown in the table below:
Number of Tutors Hired Minimum Hourly Wage Required 10 €20 20 €22 30 €25 40 €29 The school currently employs 30 tutors. If it decides to expand its staff to 35 tutors, what is the minimum hourly wage it must offer to all 35 tutors?
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Calculating the Marginal Cost of Labor
Evaluating a Differentiated Wage Strategy
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Wage Determination for Tutors
A language school determines the wage it offers based on the reservation wage of potential tutors—the minimum salary a tutor is willing to accept. The school has found that to hire a larger number of tutors, it must offer a progressively higher wage. The school currently employs 20 tutors at a wage of €25 per hour. If the school's management decides to lower the offered wage to €22 per hour to reduce costs, what is the most likely immediate outcome?
Evaluating Hiring Strategies at a Language School
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A language school, which finds it must offer progressively higher wages to attract a larger number of tutors, can decide to hire five additional tutors while keeping the hourly wage it pays constant.
A language school finds that to attract more tutors, it must offer a higher wage, as each potential new hire has a different minimum acceptable wage. The school currently employs 40 tutors at an hourly wage of €30. To expand its class offerings, the school needs to hire a 41st tutor. Based on this model, what can be concluded about the wage required to attract this additional tutor?
Hiring Decisions Based on Reservation Wages
A language school finds that to attract more tutors, it must offer a higher wage, as each potential tutor has a different minimum acceptable wage. Match each strategic decision or external event with its most likely immediate impact on the school's employment and wage costs.
Hiring Success Factors for the Parisian Language School
The Parisian Language School's Reservation Wage Curve (Figure 6.10)
Labor Turnover and Replacement Hiring at the Parisian Language School