MGEA06H3 Study Guide - Midterm Guide: Labour Economics, Business Cycle, Menu Cost

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA06H3
• Professor: Iris Au

Document Summary

Mgea06 chapter 8 review question answer key. See solutions at the back of the text. In this case, the equilibrium wage has been lowered by the outsourcing of work to other countries: melanie is cyclically unemployed because her bout of unemployment is tied to the business cycle. It is likely she will be reemployed once the economy picks up. Level of employment comes from the labour demand ( the number of workers the firms want to hire at the prevailing wage) = 100 5(10) = 50 thousands. Size of the labour force comes from the labour supply (the amount of workers who are willing to work at the prevailing wage) = 5(10) = 50 thousands. Unemployment rate = 0% (because there is no unemployment) Size of the labour force = 5(12) = 60 thousands. Level of employment = 100 5(12) = 40 thousands. Unemployment rate = (60 40) thousands/60 thousands 100% = 33 % .