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Econ 151a Midterm 1 Essay

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Midterm #1 Exam Answer Key ECN 151A Summer 2013 Eschker (3pts each) Version A 1. Ans: E 2. Question deleted; Everyone gets 3 points 3. Ans: D 4. Ans: A 5. Ans: D 6. Ans: B 7. Ans: C 8. Ans: C 9. Ans: B 10. Ans: E Version B 1. Ans: C 2. Ans: A 3. Ans: B 4. Ans: D 5. Ans: E 6. Ans: C 7. Ans: B 8. Ans: E 9. Question deleted; Everyone gets 3 points 10. Ans: D

Part II. Answer the following. Show your work for all answers. 10 points each. 1. After watching the TV show American Idol, Blake thinks that people prefer younger performers over older performers. Maybe this is because younger singers have a “lighter” voice that sounds more pleasant. Thus, Blake thinks younger voters will receive more votes. To answer his question, he gets …show more content…

Why is women’s labor force participation U-shaped when plotted against household income?

U-shaped means that as household income rises, at first labor force participation drops, then rises. An explanation is that at very low income levels, a family financial crisis draws women into the labor force, but as the husband works, then women drop out of work in order to raise children. As household income rises, women tend to have higher wages and to be more educated, so that the cost of leisure is high, and women enter the workforce.

b. (3pts) What are cohort effects that influence women’s labor force participation? Women born at the same time period are a birth cohort, and they share the same experiences in their education attainment, wealth, fertility, labor market history, and socialization experiences when young. For example, women born before 1850 were accustomed to working on the farm, and when the demand grew for them in the newly industrializing country, they were happy to join the work force. As another example, women who benefited from the rise in universal high school education in the first half of the Twentieth Century could find work with their general skills in new clerical jobs.

c. (3pts) Suppose that women’s labor supply is elastic. Will increases in labor demand or labor supply be relatively more important for increasing the amount of women working? If supply is elastic, then a small increase in labor demand will lead to a relatively large increase in

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