ECON 2450 Study Guide - Midterm Guide: Chlordiazepoxide, Capital Market, Autarky
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Instructions: unless otherwise explicitly stated, you must show how you arrived at your answer to get full mark. However, where the answer is just one, or a few, words no further motivation is needed. Answers must be given on the answer sheets provided. Do not fold the answer sheets or write on the back: labor markets [4 marks] Ls =(cid:26) l if w (cid:21) b, if w < b, 0 where l is the labor force, w is the wage rate, and b is an unemployment bene(cid:133)t. let n be the number of (cid:133)rms. Y = al(cid:13) + bl; where a > 0, b > 0, and (cid:13) 2 (0; 1) are exogenous parameters, and l is the number of workers hired by each (cid:133)rm. [2 marks] (b) illustrate the demand and supply curves in a diagram with w on the vertical axis and. Draw the graphs so that there is less than full employment in equilibrium.
