Assume that the supply of law-skilled worker is fairly elastic, but the employers’
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- Show the diagram or graph for the question of, Assume that the supply of low-skilled workers is fairly elastic, but the employers demand for such workers is fairly inelastic, is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor?arrow_forwardA conservative critic of government programs has written Governments know A conservative critic of government programs has written, “Governments know how to do one thing well. They know how to create shortages and surpluses.” Explain this quotation using examples like the minimum wage or interest-rate ceilings. Show graphically that if the demand for unskilled workers is price-elastic, a minimum wage will decrease the total earnings (wage times quantity demanded of labor) of unskilled workers. A conservative critic of government programs has written Governments knowarrow_forwardSuppose Hinterland has been a closed economy (meaning there is no immigration from foreign countries and no international trade). The current labor force has 4 million skilled workers and 8 million unskilled workers. Both types of labor have perfectly inelastic supply curves, and the current skilled-unskilled wage ratio is 2.5. The elasticity of demand of skilled labor is -0.4, while the elasticity of demand of unskilled labor is -0.1. Suppose Hinterland allows a brief period of immigration, during which time 1 million skilled workers and 4 million unskilled workers migrate to Hinterland. Suppose there are no other changes to the economy. Approximately what is the new skilled-unskilled wage ratio? (Hint: The percent change in the wage ratio is approximately equal to the percent change in the skilled wage minus the percent change in the unskilled wage.)arrow_forward
- How does the amount of employment created by an increase in the minimum wage depend on the elasticity of labor demand? Group of answer choices: a. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more elastic. b. When the demand for labor is more elastic, raising the minimum wage has no impact on employment. c. When the demand for labor is more inelastic, raising the minimum wage has no impact on employment. d. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more inelastic.arrow_forwardIf the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic? (100 – 150 words )arrow_forwardWhen the wage was $10 per hour, a group of workers supplied 30 hours of work per week on average. The wage then increased to $15 per hour, and the same group of workers supplied 35 hours of work per week on average. What is the elasticity of labor supply for this group of workers?arrow_forward
- 1. Is the price elasticity of demand for gasoline more INELASTIC over a shorter or a longer period of time? Explain. 2. Is the price elasticity of supply, in general, more INELASTIC over a shorter or a longer period of time? Explain. 3. Is the supply curve for labor usually upward sloping? Explainarrow_forwardMany unions attempt to raise the hourly wages received by their members by restricting the supply of workers firms can hire from. Assuming the demand for workers who belong to these unions is inelastic, this would cause: wages of individual union members and the total (combined) income of union members to increase. wages of individual union members to increase and the total (combined) income of union members to decrease. wages of individual union members and the total (combined) income of union members to decrease. wages of individual union members to decrease and the total (combined) income of union members to increase.arrow_forwardAssume that the supply of low-skilled workers is fairly elastic, but the employers’ demand for such workers is fairly in elastic.If the policy goal is to expand employmentforlow-skilledworkers,is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor?Whatif the policy goal is to raise wages for this group? Explain your answers with supply and demand diagrams.arrow_forward
- A more elastic labor supply shows that hours worked is more responsive to changes in tax rates. True or false?arrow_forwardUse the black point (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to indicate the equilibrium wage and level of employment after this law is implemented. True or False?????: Employers are made worse off but employees are made better off by this law. Suppose that, before the mandate, the wage in this market was $1 above the minimum wage. In this case, the wage rate with the employer mandate will be _$__ per hour, which will lead to _increase/decrease/nochange_ in the level of employment and _increase/decrease/nochange_ in the level of unemployment. Now suppose that workers do not value the mandated benefit at all. Which of the following statements are true under this circumstance? Check all that apply. Employers are worse off than before the mandated benefit. The equilibrium quantity of labor will rise. The supply curve of labor doesn't shift at all.…arrow_forwardConsider the effects of a natural disaster like hurricane Katrina on a metropolitan economy. In the initial (prehurricane) equilibrium, total employment in the metropolitan area is 500,000 workers and the daily wage is $100. The price elasticity of supply of labor is 4.0 and the price elasticity of demand for labor is −1.0. Suppose the hurricane reduces labor supply (a horizontal shift of the supply curve) by 100,000 workers. a. Use a supply-demand graph of the urban labor market to show the effects of the hurricane. b. The equilibrium wage [increases, decreases] by percent (to $ ) computed as. . . . c. The equilibrium employment [increases, decreases] by percent (to workers), computed as. . . . d. The reduction in the equilibrium employment is [greater, less] than the initial decrease in labor supply because. .arrow_forward
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