Question

3. This question is about the labor market for workers who produce widgets. A. Sketch this supply and demand model of the labor market for workers who produce widgets. Label the axes and the equilibrium wage and level of employment - B. Explain why the demand curve is downward sloping. -C. Explain why the supply curve is upward sloping - D. List one ceteris paribus factor in the supply curve. - E. List one ceteris paribus factor in the demand curve. -F. What happens in this labor market when there is a technological improvement in the production of widgets (meaning that widget workers become more productive)? Explain carefully and show on the graph and be sure to describe any changes to the equilibrium wage and equilibrium employmen level.

Answer 1

Demand comes is down ward sloping because as the urge levels in the market decreases the derma for workers increases from the from This is because as the ways increase more people becomes willing to work and set their labor hence increasing the supply one factor is change in price of leisure one factor is price of capital \r\n Due to imp roue cent in technology there decreases a dam and for labor This drives down the ways in the lagoon market Hence the equilibrium N_i W_i is at lower level than N_o W_0