labor supply is NS = 10 + 2w Labor Demand is: ND = 170 - 2N It should be ND = 170 - 2N. Plus, the market is at equilibrium already when w = 40.
Suppose the labor supply for a firm is given by:
NS = 10 + 2w
and REAL Labor Demand is given by:
ND = 170 - 2N
Currently the real wage is 40 units of output.
a)(5 points) How many workers will the firm hire at a real wage equal to 40.
b)(5 point) How many workers are willing to work at a real wage of 40?
c)(5 points) Is the labor market clearing and if not, is there pressure for wages to go up or down? Explain.
d)(5 points) Now solve for the market clearing real wage.
e) (15 points) Explain exactly how this labor market will clear....wages will not stay at 40....explain the adjustment to equilibrium.... why would firms change their behavior and why would workers change their behavior? You need to be very specific using the law of diminishing returns and the substitution effect in labor supply in you explanation.
NOW DRAW A LABOR MARKET DIAGRAM LABELING AS POINTS A, THE NUMBER OF PEOPLE HIRED AT w = 40 AND THE NUMBER OF PEOPLE WILLING TO WORK AT w = 40. LABEL THE LABOR MARKET CLEARING POINT AS POINT B.
10 POINTS FOR CORRECT AND COMPLETELY LABELED GRAPH
f) (5 points) How many people are involuntarily unemployed at w = 40 and what do wwe mean by involuntarily unemployed?
labor supply is NS = 10 + 2w Labor Demand is: ND = 170 - 2N It should be ND = 170 - 2N. Plus, the market is at equilibrium already when w = 40.
Suppose the labor supply for a firm is given by:
NS = 10 + 2w
and REAL Labor Demand is given by:
ND = 170 - 2N
Currently the real wage is 40 units of output.
a)(5 points) How many workers will the firm hire at a real wage equal to 40.
b)(5 point) How many workers are willing to work at a real wage of 40?
c)(5 points) Is the labor market clearing and if not, is there pressure for wages to go up or down? Explain.
d)(5 points) Now solve for the market clearing real wage.
e) (15 points) Explain exactly how this labor market will clear....wages will not stay at 40....explain the adjustment to equilibrium.... why would firms change their behavior and why would workers change their behavior? You need to be very specific using the law of diminishing returns and the substitution effect in labor supply in you explanation.
NOW DRAW A LABOR MARKET DIAGRAM LABELING AS POINTS A, THE NUMBER OF PEOPLE HIRED AT w = 40 AND THE NUMBER OF PEOPLE WILLING TO WORK AT w = 40. LABEL THE LABOR MARKET CLEARING POINT AS POINT B.
10 POINTS FOR CORRECT AND COMPLETELY LABELED GRAPH
f) (5 points) How many people are involuntarily unemployed at w = 40 and what do wwe mean by involuntarily unemployed?
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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.
