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Consider the labor market. Suppose that the supply of labor is = 2 + H/2 and the demand for W=52−2H. Where W is wage and is hours worked.
Now suppose that the government levies a $5 per hour payroll tax on buyers of labor (firms).
-
Determine the worker (supplier) and firm (buyer) tax burdens.
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Determine the
deadweight loss associated with this payroll tax.
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- Suppose the inverse market demand function is p(q) = 10 + 125/q, p, q ≥ 1 and the market supply function is q(p) = 4p, p, q ≥ 1. (a) Graph the market demand and supply functions as accurately as possible. (b) Find the equilibrium price and quantity. (c) Show that the demand is elastic. (d) Find the value of MR = d(pq)/dq. (e) If there is a quantity tax of t = $2.5/unit, show how much of the tax burden that will be passed to the consumer.Market demand for Mandrake roots is given by Q=325-4P and market supply is given by Q=5P. The government imposes a price ceiling of $10. What is the minimum Deadweight Loss, in absolute terms, because of the price ceiling? Assume competitive markets.Suppose legislation is passed stating that a per unit tax of $.50 per gallon of gasoline must be paid by energy suppliers. Assuming demand for gasoline is more inelastic than supply of gasoline, then the economic burden of this tax? a. Will be equally experienced by energy suppliers and consumers. b. Gasoline prices will be disrupted by the tax and this disruption will harm consumers more than energy suppliers. c. Gasoline prices will be disrupted by the tax but this disruption will harm only energy suppliers since they are ordered by law to pay the tax. d. Gasoline prices will be disrupted by the tax and this disruption will harm suppliers more so than consumers.
- Suppose the rent control (price ceiling) in California will be nullified for a year and that market rents will now be institutionalized. Assume that all apartment units are of identical structure and so are offered at the same rent. To address the plight of the residents, especially those who may be unable to pay the market rent, an income subsidy will be given to all low-income households equal to the difference between the old controlled rent and the new market rent. Are the renters or tenants better or worse off as a result of these policies? What about the rentees or the landlords, are they better or worse off? Explain your answers to get full credit.The market for N-95 masks is perfectly competitive. Market Demand is given by Q=308-2P and Market Supply is given by Q-2P. The government imposes a price ceiling of $63. What is the minimum Deadweight Loss, in absolute terms because of the price ceiling? Enter a number only, drop the $ sign.Suppose the rent control (price ceiling) in California will be nullified for a year and that market rents will now be institutionalized. Assume that all apartment units are of identical structure and so are offered at the same rent. To address the plight of the residents, especially those who may be unable to pay the market rent, an income subsidy will be given to all low-income households equal to the difference between the old controlled rent and the new market rent. 1. Are the renters or tenants better or worse off as a result of these policies? What about the rentees or the landlords, are they better or worse off?
- Consider a market with a demand curve given by P = 1000 - 2Q and a supply curve given by P = 3Q. Suppose the government imposes a price ceiling of 800 dollars. What is the deadweight loss? Give your answer as a whole number.Consider the labour market for farms during the harvest season. Assume the market is perfectly competitive, with a labour demand function QD = 10-P and a labour supply function QS = 3P, where P is the wage. a) What are the consumer (farm owners) surplus and producer (farm workers) surplus in equilibrium? b) What is the price elasticity of demand at the equilibrium? c) Suppose the government subsides the farm owners (consumers) $1 for every unit of labour purchased. Then, compute the quantity of labour traded in the market, the wage received by the workers and the wage paid by the farm owners. d) Calculate the consumer surplus and producer surplus in the presence of the subsidy in part c).Consider the labor market, i.e. the market for hours of work. When analyzing labor markets, price is just the hourly wage (e.g. 10 dollars an hour), and quantity is the number of hours demanded (by firms) or supplied (by workers). Suppose the government imposes a minimum wage of $15 per hour. If the demand and supply functions are given by Q = 25 - P and Q = -15 + P, where Q is in million hours and P is in dollars per hour, does the imposition of the minimum wage cause a deadweight loss in the market?
- Why do labor experts disagree about whether labor taxes have small or large deadweight losses? Given your knowledge of economics and experience to date, what is your view on the issue? Explain your reasoning.How would imposing a minimum wage below the market-clearing wage affect employment in a competitive labor market? Group of answer choices a. Employment would be unchanged because the market forces drive the wage to a higher level. b. Employment would decrease as some workers who are willing to work at the lower competitive wage would no longer be able to find work. there would be a shortage of labor c. Employment would increase because setting a minimum wage below the market wage would increase the quantity of labor demanded d. Employment would decrease because the quantity of labor supplied would decreaseThe market for low-skilled workers is highly competitive, due to the high numbers of low skilled individuals. If the labor supply is given by the equation QS = 10W and measured per hour, and the demand for labor is given by the equation QD = 240 − 20W. Where Q measures the quantity of labor hired (in thousands of hours). Answer the following: (a) At the market equilibrium what is the going wage rate and quantity of low-skilled labor being employed? (b) If the union successfully forces a minimum wage increase of $9 per hour, at the new market equilibrium what will be the new quantity of labor hired and the quantity of any excess (demand or supply) of labor? (c) At the $9 minimum wage how much deadweight loss is created? (d) After the implementation of the $9 minimum wage, in terms of surplus how much better off are low-skilled workers and how much worse off are employers? (e) If the minimum wage is set at $11 rather than $9 how does the deadweight loss and surplus change?