Principles of Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421193
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 13, Problem 3.1P
Sub part (a):
To determine
Quantity of labor supplied, number of unemployed and the
Sub part (b):
To determine
Total employment, labor force, and the employment rate.
Sub part (c):
To determine
Changes in the labor market
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The market for plumbers in Boston is currently
in equilibrium. Labor supply is given by Ls = 3
x W and labor demand is given by Ld = 45 -
W (where L = quantity of workers, Ls
quantity of workers supplied, Ld = quantity of
workers demanded, and W = wage). The
plumbers have just unionized and have
negotiated a wage of $25 for all plumbers in
Boston. How many plumbers do you expect
to be unemployed as the result of this
change? Please round your answer to the
nearest integer.
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%3D
%3D
Supply: Thinking Like a Seller - End of Chapter Problem
Jerome is working as an IT consultant. His individual labor supply curve is given in the accompanying graph. Jerome decides to
enroll in college and will begin taking classes next semester.
Make the appropriate change to the graph to show the most likely effect on Jerome's labor supply curve of his decision to attend
college. If Jerome's decision to attend college results in a change in supply, shift the supply curve appropriately, but leave the
wage line unchanged. If Jerome's decision to attend college results in a change in quantity supplied, adjust the wage line
appropriately, but leave the supply curve unchanged.
Wage
Jerome's individual labor supply curve
Wage
Quantity
Supply
The adjacent graph shows the initial labor supply curve (LS₁), initial labor demand curve (LD₁), and the
initial labor market equilibrium (E₁) of an economy which is in a recession.
Using the multi-point curve drawing tool, show the impact of introducing a wage subsidy (s) on this
economy by shifting the appropriate curve, and label the new curve accordingly.
Carefully follow the instructions above and only draw the required objects. Use the fewest points
possible in achieving the desired outcome.
Which of the following statements are correct in describing the efficiency of new public expenditures?
(Check all that apply.)
A. Special interest groups always make sure that wasteful projects with negative social value
never get funded.
B.
Many of the projects with the highest social return have been funded already, raising the
chance that a new project won't be socially desirable.
C. The urgency of spending huge sums of new government expenditures makes it harder to
identify and…
Chapter 13 Solutions
Principles of Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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- Q1: Which of the following would shift a market labor supply curve to the left? Group of answer choices an increase in the price of an output labor-saving technology a change in worker tastes so that workers want to spend more time home with family an increase in immigrationarrow_forwardConsider the labor market illustrated in the figure to the right, where the market equilibrium wage is W, and equilibrium employment is L1. Suppose opportunities in other labor markets decrease. Use the line drawing tool to show the effect of this change in the labor market by drawing either a new labor supply curve (S2) or a new labor demand curve (D,).arrow_forward(Problem 1, Page 437) A firm identifies the following relationship between the real wage it pays and the effort exerted by its workers: Real Wage 8 10 12 14 16 18 The marginal product of labor for this firm is MPN = E(100-N)/15 Effort 7 10 15 17 19 20 where E is the effort level and N is the number of workers employed. If the firm can pay only one of the six wage levels shown, which should it choose? How many workers will it employ? There are 200 workers in the town where the firm is located, all willing to work at a real wage of 8. Does this fact change your answer to the first part of this question? If so, how?arrow_forward
- Consider the following model of the economy Production function: Y = AKN – N2/2Marginal product of labor: MPN = AK – N. Where the initial values of A = 8 and K = 10. The initial labor supply curve is given as: NS = 20 + 9w. Cd = 401 + .50(Y-T) – 500rId = 800 – 500rG = 500T= 100 Md/P = 469 + 0.5Y- 1000r Nominal Money supply M = 4000 We assume that expectedinflation is zero (?e?= 0) so that money demand depends directly onthe real interest rate (since i = r). 1 a) Solve for the labor market clearing real wage (w*), theprofit maximizing level of labor input (N*), and the full employment level ofoutput (Y*). Please show your work. Draw two diagrams verticallywith the labor market on the bottom graph and the production function on thetop graph. Be sure to label everything including this initial equilibrium pointas point A b) Derive an expression for the IS curve (r in terms of Y). Please show all work c) Find the real interest rate that clears the goods market. Please show all work…arrow_forwardNeed help ASAP, will give thumbs up: Consider an empirical wage equation of the form: log(W) = a + b(EDUC) + c(EXP) + d(EXPSQ) + u where the components are defined as: W = hourly wage rate log() is natural logarithmic function EDUC = completed years of school EXP = work experience EXPSQ = years of work experience squared (i.e. EXP times EXP) u = unobservable determinants of the hourly wage rate With data on the relevant variables for a sample of workers, the parameters a, b, c, and d can be estimated. QUESTION: What does human capital theory predict about the parameters of this wage equation? ANSWER CHOICES: b>0, c>0, d>0 b>0, c>0, d<0 b>0, c<0, d>0 b<0, c>0, d<0 b<0, c<0, d>0 Answerarrow_forwardQ5 Those working for Amazon have been trying to form a union. Suppose that these workers are successful in forming a union and call themselves the Amazon Delivery Workers. Assume the union successfully negotiated a 14 percent wage increase and the result was that the quantity of labour demanded decreased by 10 percent. Given a fixed labour demand curve, we can conclude that Multiple Choice labour demand is inelastic. the coefficient of elasticity of labour demand is equal to 1. labour demand is elastic. the labour demand curve is upsloping. economies of scale has been achieved.arrow_forward
- In the short run one half of the labour force has high skills and one half low skills (in terms of Figure 13.2 this means that the short-run supply curve is vertical at 0.5). The relative demand for the high-skill workers is given by W = 100×0.4×(1− f), where W is the wage premium and f is the fraction that is skilled. The premium is measured in percent. (a) Illustrate the supply and demand curves graphically, and compute the skill premium going to the high-skill workers in the short run by solving the two equations. (b) If demand increases to W = 100 × 0.6 × (1 − f) what is the new premium? Illustrate your answer graphically. Figure 13.2arrow_forwardIan works at an iron smelter in Pittsburgh, the center of iron production in America. Due to the difficulty in measuring the productivity of individual employees, Ian's employer as well as the other iron smelters all pay an efficiency wage. Adjust the wage line on the graph to reflect this situation. What characteristic of efficiency-wage jobs is not supported by the situation shown in the graph? The wage rate will eventually return to the market-clearing level. Efficiency wages result in an increase in the rate of unemployment. Elevated wages serve as an economic incentive to work harder. Efficiency wage jobs result in a surplus of workers at the wage being offered. Wage ($ per hour) Wage Quantity of workers (in thousands) S Oarrow_forwardAfter world war 2, social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home. Given this change, the labor supply curve would havearrow_forward
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