Question

Suppose that Steve’s marginal revenue from job search is (MR = 110 – 7.25w), where w...

Suppose that Steve’s marginal revenue from job search is (MR = 110 – 7.25w), where w is the wage offer at hand. Additionally, Steve’s marginal cost of job search is (MC = 60 + 2w).

a. Graph Steve’s MR and MC curves relating to job search.

b. What will Steve’s asking wage be?

c. Will Steve accept a job offer of $9.00? Justify your response with economic reasoning.

d. Suppose that unemployment insurance benefits increase, causing the marginal cost of job search to decrease to (MC = 50 + 2w). What will the new asking wage for Steve be?

e. If the replacement ratio concerning unemployment insurance were to decrease, what would be the consequences on:

i. The length of unemployment,

ii. The unemployment rate, and

iii. The post unemployment wage?

f. If the discount rate of an “individual” were to increase dramatically during the job-search process, what would be the consequences on:
i. The length of unemployment,
ii. The unemployment rate for the economy, and
iii. The post unemployment wage?
g. Define and explain the differences between frictional, seasonal, cyclical, and structural unemployment.
h. Which type of unemployment is most concerning to economists? Explain.
i. Who are the unemployed? Provide specific details using race, sex, age, and education as factors in your response.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answering only first four parts as per HomeworkLib policy

A) graph

B) at equilibrium, MR & MC of job search are Equalized

So 110-7.25W = 60+2W

W = 5.405

C) now at w = 9, MR = 110-7.25*9 = 44.75

MC = 60+2w = 78

Hence MC of job search > MR from job search

So Steve will not offer the job at w = 9

D) at new equilibrium , MR = New MC

110-7.25W = 50+2W

W* = 6.486

An increase in benefits & decrease in search costs will increase the asking wage & also lengthens the duration of unemployment spell

Add a comment
Know the answer?
Add Answer to:
Suppose that Steve’s marginal revenue from job search is (MR = 110 – 7.25w), where w...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Super stuck on a couple of questions on this scenario. Advanced Scenario 7: Mark and Barbara...

    Super stuck on a couple of questions on this scenario. Advanced Scenario 7: Mark and Barbara Matthews Directions Using the tax software, complete the tax retum, including Form 1040 and all appropri- ate forms, schedules, or worksheets. Answer the questions following the scenario. Note: When entering Social Security numbers (SSNS) or Employer identification Numbers (EINS), replace the Xs as directed, or with any four digits of your choice. Interview Notes • Mark and Barbara are married and want to file...

  • I need Summary of this Paper i dont need long summary i need What methodology they used , what is the purpose of this p...

    I need Summary of this Paper i dont need long summary i need What methodology they used , what is the purpose of this paper and some conclusions and contributes of this paper. I need this for my Finishing Project so i need this ASAP please ( IN 1-2-3 HOURS PLEASE !!!) Budgetary Policy and Economic Growth Errol D'Souza The share of capital expenditures in government expenditures has been slipping and the tax reforms have not yet improved the income...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT