Unemployment Section
Suppose that there are 500 workers in the economy and the labor demand function is given by LD = 1000 - 10 WP where LD is the number of workers and WD is the Real wage rate.
(a) Find the equilibrium real wage.
(b) Suppose that Congress institutes a minimum real wage of $40 per hour. Find the level of employment and the real wage that will exist in this market.
(c) Suppose that Congress institutes a minimum real wage of $60 per hour. Find the level of employment and the real wage that will exist in this market.
Unemployment Section
Suppose that there are 500 workers in the economy and the labor demand function is given by LD = 1000 - 10 WP where LD is the number of workers and WD is the Real wage rate.
(a) Find the equilibrium real wage.
(b) Suppose that Congress institutes a minimum real wage of $40 per hour. Find the level of employment and the real wage that will exist in this market.
(c) Suppose that Congress institutes a minimum real wage of $60 per hour. Find the level of employment and the real wage that will exist in this market.
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Consider now the information about the supply of labor in the file named Supply of Labor - HW2. Combine this information with information about the demand for labor in the previous question. What are the equilibrium levels of real wage and employment?
Equilibrium Real Wage = () units
Equilibrium Level of Employment =() Workers
Consider the demand and supply information in the previous questions. What is the level of potential GDP in this country?
Potential GDP = units.
Consider the demand and supply information in the previous questions. Suppose that currently, the nominal wage is W = $1,000 and the price level is P = $20. Then, there are jobs available in the economy and workers are willing and able to work.
Consider the demand and supply information in the previous questions. Suppose that currently, the nominal wage is W = $1,000. If the price level increases by 25% and if the nominal wage does not change, There will be jobs available in the economy and workers will be willing and able to work.
Consider the demand and supply information in the previous questions. Suppose that currently, the nominal wage is W = $1,000. If the price level increases by 25% and if the nominal wage does not change, the labor market will be thrown out of equilibrium. To restore equilibrium, the nominal wage must change to dollars.
