Maersk Cuts 10,000 Jobs as Shipping Demand Falls

EconEye Admin

3 years ago

Maersk already cut 6,500 jobs earlier this year, but the firm says worsening prices for shipping by sea require further job cuts. The Entertainer Toy company, which engages Maersk to ship its freight has seen prices fall from $18,000 per container last year to $2,000 today.—bbc.com

Answer the following questions to check your understanding of the story.

What happened in the market for labor at Maersk?

a) The demand for labor decreased because the price of its freight shipping services fell.

b) The supply of labor decreased because the price of its freight shipping services fell.

c) The demand for labor decreased because Maersk cut jobs earlier in the year.

d) The supply of labor increased because Maersk cut jobs earlier in the year.

Wrong! - What changes a firm’s demand for labor? What changes the supply of labor? What was the change that occurred at Maersk?

Correct! - Maersk’s demand for labor depends in part on the price of the freight shipping it provides. As the demand for freight shipping decreased, Maersk’s freight shipping price fell, and its demand for labor decreased.

What happened to Maersk’s value of marginal product of labor?

The value of marginal product of labor _______.

a) didn’t change because the marginal product of workers didn’t change

b) decreased because the price of freight shipping services fell

c) decreased because the marginal product of workers decreased

d) increased because Maersk cut jobs

Wrong! - How is the value of marginal product calculated? When does the value of marginal product change?

That's Right! - The value of marginal product equals the price of the product multiplied by the marginal product of labor. When the price of freight shipping fell, Maersk’s value of marginal product decreased.

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