Please provide an answer for A and B
Consider a simple model of the labour market, characterised by a downward-sloping labour demand curve and an upward-sloping wage-setting curve in the
N − W/P - plane, where N is the number of employed workers and W/P the real wage. Labour demand is a linear function of N and given by
W/P = 140 − 0.5N.
Wage setting is given by
W/P = 44 + 0.5N.
A. Suppose that the labour force, L, comprises 100 workers. Illustrate the equilibrium in a diagram and compute employment, unemployment and the market-clearing real wage.
B. Starting from the equilibrium in a, suppose that the government introduces a minimum wage corresponding to a real wage of 95. Illustrate the effects of the reform in a diagram. How high is the unemployment rate under the minimum wage?
Homework Answers
ASAP please 6. Suppose the labour demand function is given as w = 18 - 1.6L...
ASAP please
6. Suppose the labour demand function is given as w = 18 - 1.6L and the labour supply function is given as w=6+0.4L. Determine the equilibrium wage and equilibrium number of workers algebraically. Draw the above labour demand and labour supply functions on a diagram with won the vertical axis and illustrate the effect of a binding minimum wage.
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2....
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is...
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2. Draw the...
2. In an industry, labour supply is E 10 + w and labour demand is E...
2. In an industry, labour supply is E 10 + w and labour demand is E the level of employment and w is the hourly wage 60-4w, where E is a) What are the equilibrium wage and employment if the labour market is competitive? b) Suppose the government sets a minimum hourly wage of $12. How many workers would lose their jobs? How many additional workers would want a job at the minimum wage? What is the unemployment rate? c)...
. Suppose the labour demand function is given as w = 18 – 1.6L and the labour...
. Suppose the labour demand function is given as w = 18 – 1.6L and the labour supply function is given as w=6+0.4L. Determine the equilibrium wage and equilibrium number of workers algebraically. Draw the above labour demand and labour supply functions on a diagram with w on the vertical axis and illustrate the effect of a binding minimum wage.
200 5. Suppose you are given the following inverse demand function, p and the inverse supply...
200 5. Suppose you are given the following inverse demand function, p and the inverse supply Q+1 function, p=5+0.50. With p on the vertical axis and Q on the horizontal, draw these two functions. Also solve for the equilibrium Q* and equilibrium price p*. 6. Suppose the labour demand function is giverlas w = 18 - 1.6L and the labour supply function is given as w=6+0.4L. Determine the equilibrium wage and equilibrium number of workers algebraically. Draw the above labour...
the labour market model a. Take a look at figure 9.12, the labour market model. Describe...
the labour market model
a. Take a look at figure 9.12, the labour market model. Describe
position B. Explain why B is not a Nash equilibrium. What would
happen?
b.
In a. you’ll describe an adaptation process. However, that might
not take place. For what reasons?
Labour supply Average product of labour Real wage Price-setting curve Equilibrium unemployment Demand-deficient or cyclical unemployment, at B Wage-setting curve Total involuntary unemployment, at B Employment, N The Nash equilibrium At point B, total...
Suppose that the price-setting equation also takes into account the price of energy (another input in...
Suppose that the price-setting equation also takes into account the price of energy (another input in production). In particular, P= (1 + m)Wql-a where q is the price of one unit of energy. The wage-setting equation is given by W = pe? 4. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. How does the equilibrium unemployment rate change when the price of energy decreases? What is the intuition for this result?...
In the figure below, when employment is at the level at point C, the wage-setting curve...
In the figure below, when employment is at the level at point C, the wage-setting curve lies below the price setting curve. Assume inflation is zero at point A In a competitive system, firms will begin to prices and this will start a process of Waresting curve Labour productivity Real profit per worker (High unemployment) Price setting curve (Low unemployment Real wage Real wage per worker Employment, N Employment at labour market equilibrium reduce inflation increase inflation Firms will cut...
can someone explain please Question 5 0/2 pts Which of the following is most likely to...
can someone explain please
Question 5 0/2 pts Which of the following is most likely to cause an increase in the inflation rate? a reduction in the percentage of workers who are in labor unions an increase in competition between firms an increase in the non-labor costs of production an increase in the unemployment rate Rising unemployment tends to put downward pressure on wages and prices. In the figure below, when employment is at the level at point C, the...
ASAP please
6. Suppose the labour demand function is given as w = 18 - 1.6L and the labour supply function is given as w=6+0.4L. Determine the equilibrium wage and equilibrium number of workers algebraically. Draw the above labour demand and labour supply functions on a diagram with won the vertical axis and illustrate the effect of a binding minimum wage.
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1 + m)W where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2....
Question 3: (45 marks] Suppose the price-setting equation is given by P= (1+mW where m is the markup. The wage-setting equation is given by W = pe? where z are unemployment benefts and u is the unemployment rate. 1. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. Is this the natural rate of unemployment? Does the equilibrium rate of unemployment change if unemployment benefts decrease? Explain? (8 marks] 2. Draw the...
2. In an industry, labour supply is E 10 + w and labour demand is E the level of employment and w is the hourly wage 60-4w, where E is a) What are the equilibrium wage and employment if the labour market is competitive? b) Suppose the government sets a minimum hourly wage of $12. How many workers would lose their jobs? How many additional workers would want a job at the minimum wage? What is the unemployment rate? c)...
200 5. Suppose you are given the following inverse demand function, p and the inverse supply Q+1 function, p=5+0.50. With p on the vertical axis and Q on the horizontal, draw these two functions. Also solve for the equilibrium Q* and equilibrium price p*. 6. Suppose the labour demand function is giverlas w = 18 - 1.6L and the labour supply function is given as w=6+0.4L. Determine the equilibrium wage and equilibrium number of workers algebraically. Draw the above labour...
the labour market model
a. Take a look at figure 9.12, the labour market model. Describe
position B. Explain why B is not a Nash equilibrium. What would
happen?
b.
In a. you’ll describe an adaptation process. However, that might
not take place. For what reasons?
Labour supply Average product of labour Real wage Price-setting curve Equilibrium unemployment Demand-deficient or cyclical unemployment, at B Wage-setting curve Total involuntary unemployment, at B Employment, N The Nash equilibrium At point B, total...
Suppose that the price-setting equation also takes into account the price of energy (another input in production). In particular, P= (1 + m)Wql-a where q is the price of one unit of energy. The wage-setting equation is given by W = pe? 4. Derive the real wage and unemployment consistent with equilibrium in the labor market in the medium run. How does the equilibrium unemployment rate change when the price of energy decreases? What is the intuition for this result?...
In the figure below, when employment is at the level at point C, the wage-setting curve lies below the price setting curve. Assume inflation is zero at point A In a competitive system, firms will begin to prices and this will start a process of Waresting curve Labour productivity Real profit per worker (High unemployment) Price setting curve (Low unemployment Real wage Real wage per worker Employment, N Employment at labour market equilibrium reduce inflation increase inflation Firms will cut...
can someone explain please
Question 5 0/2 pts Which of the following is most likely to cause an increase in the inflation rate? a reduction in the percentage of workers who are in labor unions an increase in competition between firms an increase in the non-labor costs of production an increase in the unemployment rate Rising unemployment tends to put downward pressure on wages and prices. In the figure below, when employment is at the level at point C, the...
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