Question

The market demand for labour is given by w = 80 – 0.2L, where w is the wage rate ($/week) and L is the number of workers the firms want to employ. The market supply of labour is given by w = 10 + 0.05L, where w is the wage rate ($/week) and L is the number of workers who want to work.

a. What is the (point) wage rate elasticity of labour demand in a competitive market equilibrium?

b. What is the (point) wage rate elasticity of labour supply in a competitive market equilibrium?

The government introduces the payroll tax $1 per hr per worker. Answer the following 2 questions

c. What is the portion (economic incidence) of the tax that the workers pay (in cents per dollar of the tax)?

d. What is the deadweight loss resulting from this tax?

Answer #1

1. Consider a labour market where labour demand is
given by w=240−2LD and labour supply is given by w=30+3LS .
a. Calculate the competitive market equilibrium quantity
of labour and wage.
b. Calculate the competitive market consumer surplus and
producer surplus
c. Calculate the monopoly market equilibrium quantity
of labour and wage.
d. Calculate the monopoly market consumer surplus and
producer surplus.
e. Calculate the bilateral monopoly equilibrium
quantity of labour.
f. Calculate the level of leverage, α , the...

Consider the following demand and supply equations in the market
for labour. Supply: W = 10 + (1/3)L Demand: W = 1, 000 − (2/3)L
Show your work as you respond to the following questions.
(a) What is the market equilibrium wage and quantity?
(b) The government implements a minimum wage of W = 370. What is
the Consumer Surplus?
(c) Calculate the Producer Surplus under a minimum wage of W =
370.
(d) Find the Deadweight Loss under a...

In a competitive labor market, market labor demand and supply
functions are given as follows: LS = -2500 + 1000W; LD = 10500 -
625W, where LD = labor demand, LS = labor supply and W = hourly
wage. The production function Q = 88.8L - 0.5L2 of a
firm operating in this market where skiing vehicles are produced,
where Q = refers to production (output in units / hour) and L =
number of workers employed per hour. This...

You are studying the labour market for financial analysts. The
demand curve is given by L=500-w while the supply is L=-40+2w. All
workers are members of a union. The union was initially maximizing
total wages paid. But due to the increased unemployment, the union
decided to maximize employment. By how much did the employment
increase due to the changed goal of the union? Provide a
calculation and picture.

1.Given: Suppose you are given the following market demand
function for apples:
QD = 100*I + 2*PSub − P
where P is the price per unit of apples, I is
consumer income and PSub is the price per unit of
grapes (a substitute for apples). And given the market supply
function for apples:
QS = P − 2*w − 4*m
where P is the price per unit of apples, w is the
hourly wage rate the firm pays to workers...

Consider the case where the demand curve and supply curve for
unskilled labor are given in the following table:
(1) Wage Rate (/hour)
(2) Wage Rate2 (/hour)
(3) Q of Labour Demanded (hrs/week)
(4) Wage Rate2 (/hour)
(5) Q of Labour Supplied (hrs/week)
8.5
1000
1900
8
1200
1800
7.5
1400
1700
7
1600
1600
6.5
1800
1500
6
2000
1400
5.5
2200
1300
1. What is the equilibrium wage rate? ____________
2. What is the quantity of labor hours...

Consider the following market. Demand is given by qd = 150 – 2P,
where qd is the quantity demanded and P is the price. Supply is
given by qs = P, where qs is the quantity supplied.The government
implements a tax of $30 per unit to be paid by consumers. What is
the new market equilibrium? What is the economic incidence of the
tax (that is, who pays for the tax)? How would your answer change
if the government implemented...

Assume that the labour market can be described by the following
supply and demand equations:
S:e = a + bP + cW & D:e = α + βP + η W
where e is the log of employment, W is the log wage, and P is a
log of the “population.”
a) Interpret b and β. Explain how immigration may shift the
population.
b) Solve for the equilibrium wage and employment level as a
function of the population.

Part A. Consider the market for apples where the market demand
is given by QD = 30 − 2p and market supply is given by QS = P Find
the market equilibrium. What will be the quantity traded if an
excise tax of $2/unit is imposed? Calculate the deadweight loss of
the excise tax.
Part B. Consider the same market from question #1. Consider that
you are the only seller in that market and you produce apple for a
marginal...

Low-skilled workers operate in a competitive market. The labor
supply isQS = 10W (where W is
the price of labor measured by the hourly wage) and the demand for
labor is
QD =240 – 20W.
Q measures the quantity of labor hired (in thousands of
hours).
c. What is the deadweight loss of a $9 minimum
wage?
d. How much better off does the $9 minimum
wage make low-skilled workers (in other words,
how much does producer surplus change),
and...

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