3. Suppose the following equation characterize supply and demand in the labor marketmodel:labor supply: L = 1 + wlabor demand: L = 11 – wEquilibrium occurs at an employment level L* and a wage w* so that the labor market clears.What is the equilibrium value of wage and labor in this model?a) w* = 1/5, L* = 4/5b) w* = 6, L* = 5c) w* = 5, L* = 6d) w* = 6, L* = 6e) Not enough information is given.

Given; Labor Supply; Ls=1+wLabor demand; Ld=11-w

3. Suppose the following equation characterize supply and demand in the labor market model: labor supply: L* = 1+ w labor demand: L = 11 - w Equilibrium occurs at an employment level L* and a wage uw* so that the labor market clears. What is the equilibrium value of wage and labor in this model? a) w 1/5, L' = 4/5 b) w* = 6, L* = 5 c) w* = 5, L = 6 d) w = 6, L* = 6 e) Not enough information is given.

3. Suppose the following equation characterize supply and demand in the labor market model: labor supply: L* = 1+ w labor demand: L = 11 - w Equilibrium occurs at an employment level L* and a wage uw* so that the labor market clears. What is the equilibrium value of wage and labor in this model? a) w 1/5, L' = 4/5 b) w* = 6, L* = 5 c) w* = 5, L = 6 d) w = 6, L* = 6 e) Not enough information is given.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 10PA

See similar textbooks

Similar questions

Suppose the supply curve of physicists is given by w =10 + 5E, while the demand curve is given by w = 50 - 3 E. Calculate the equilibrium wage and employment level. Suppose now that the demand for physicists increases to w = 70 - 3 E. Assume the market is subject to cobwebs. Calculate the wage and employment level in each round as the wage and employment levels adjust to the demand shock. (Recall that each round occurs on the demand curve—when the firm posts a wage and hires workers.) What are the new equilibrium wage and employment level?
Units of labor Opportunity cost of a worker in terms of units output = real wage required by an additional worker Real value of Output per additional worker Maximum real wage a producer is willing to pay for an additional worker (1) (2) (3) 8 1 9 10 2 8 12 3 7 16 4 6 18 5 5 20 6 4 22 7 3 a) Carefully draw for yourself the demand and supply curves of labor on a diagram and find the equilibrium real wage and the equilibrium level of employment. To each level of employment corresponds a level of real GDP given in the following table. Production Function Schedule Level of Employment Aggregate quantity supplied = real GDP 10 10 12 40 14 65 16 85 18 100 20 105 b) Find the full employment real GDP, aggregate quantity supplied, and nominal wage for each of the following price levels P = 1, 2 ,3, 4. Does the equilibrium levels of employment and AQS change as the price level…
1) Suppose that Labor Supply is linear with exactly 0M people willing to work at a wage of $0 and 5M more people willing to work for each $1 increase in the wage. Labor Demand was such that the equilibrium wage rate was $20. Suppose that a negative shock hits labor demand so that the new [inverse] Labor Demand Curve has a vertical intercept at 110M and slope of -0.5. If downward wage rigidity prevents the wage from falling below $20, then how many people will be unemployed?
8 . explain why the following statement is true, or false, or uncertain. If employers are prejudiced, the Becker model predicts that in equilibrium minority workers will receive a lower wage than majority workers. (Neglect considerations of the long run.) 2. What do companies do to try to keep a union from organizing the workforce
Suppose a firm’s hourly marginal product of labour is given by MPN = 0.2(200 − N), where N is the number of labour hours used in production. The amount of labour supplied by workers, NS, is given by NS = 100 + 5w, where w is the real wage. (a) Suppose the current real wage is equal to 20. How much labour will the firm want to hire? How much labour will the workers want to supply? Is there excess supply or excess demand of labour in the economy? Do you expect the real wage to go up or go down in this case? (b) Find the equation of the labour demand and calculate the equilibrium levels of real wage and full-employment. (c) If the government decides to tax the labour income, the equation of labour supply becomes NS = 100 + 5(1 − τ )w. Suppose τ = 40%. Repeat part (b). Compared to the results in (b), do the equilibrium levels of real wage and full-employment increase or decrease? Provide an intuitive explanation to your answers.
Q1. Suppose the labor market is initially at its equilibrium, i.e., labor supplied equals labor demanded. Now suppose the government raises the retirement age from 65 to 67. Explain and show graphically how the increase of the retirement age affects the labor market. Draw the full graph and provide a detailed explanation of the effect. Label the axes/curves, explain why either the aggregate labor demand curve or the aggregate labor supply curve shifts, and describe the economic mechanism that moves the economy from the old to the new equilibrium.
Q) a) What is the equilibrium wage rate and equilibrium level of employment? A. $15 and 35 units of labor B. $20 and 15 units of labor C. $25 and 20 units of labor D. $35 and 10 units of labor b) If the government institutes a minimum wage rate at $30, the unemployment in the market will be: A. 10 units of labor. B. 15 units of labor. C. 20 units of labor. D. 25 units of labor. C) f the government fixes a minimum wage rate at $15, the unemployment in the market will be: A. 0 units of labor B. 10 units of labor C. 20 units of labor D. 30 units of labor
Suppose that a consulting firm has generated the following information about the economy of Growville: (i) The current employment in export industries is 50,000; (ii) The current total employment in the city is 150,000; (iii) Export employment is expected to grow by 10,000 jobs. a. Is there enough information to accurately predict the effect of the increase in export employment on total employment? b. If you have enough information, predict the employment effect and illustrate your answer with a graph. c. If there is insufficient information, proceed with the analysis as far as you can and list the additional information you need to complete the analysis. Illustrate your answer with a graph.
10 DRAW A GRAPH. WITHOUT GRAPH THUMBS DOWN!Suppose the markup of goods prices over marginal cost is 2% and the wage-setting equation is W=P(1-u) with u being the unemployment rate.1. What is the Natural level on Unemployment?2. What is the real wage as determined by the price setting equation?3. If the markup increases to 2.5% due to an increase in the price of Oil what happens to the natural rate of employment? Explain briefly and graphically this change.
Consider an economy in which the marginal product of labour is given by MPN = A(150 − N), where N is the amount of labor used. The amount of labour supplied is given by 60 + 5(1 − t)w, where w is the real wage and t is the tax rate on labour income. (a) Suppose A = 2 and t = 20%. Calculate the equilibrium levels of real wage and employment. (b) Suppose that the economy experiences an adverse supply shock and A = 1. Everything else remains the same as before. Calculate the equilibrium levels of real wage and employment in this case. (c) Suppose that the government lowers the labour income tax by 50% following the adverse supply shock, i.e., A = 1 and t = 10%. Calculate the equilibrium levels of real wage and employment in this case. (d) Use the labour market diagram to illustrate the adjustments from the original equilibrium in part (a) to the equilibrium in part (b) and then the adjustments from the equilibrium in part (b) to the equilibrium in part (c). Explain the adjustments from…
Question 1: a) Show the equilibrium outcome of the wage-setting, price-setting model of the labour market and provide economic intuition for the model. b) Show how the equilibrium real wage and level of employment in this model changes when there is an increase in the power of trade unions. Do the changes in wages and employment seem reasonable to you? c) Briefly explain why a wage subsidy changes equilibrium in this model.
3.1 Labor market equilibrium occurs at a real wage at which the quantity demanded for labor equals the quantity ................ of labor.