Question

The labor market for architects has “cobwebs” and is described initially by the labor supply curve w=10+2E, labor demand curve w=50-E after which labor demand increases (due to a housing boom) to w=60-E.

a. Give the original employment and wage levels and then three rounds of wage and employment levels.

b. Illustrate the cobweb model on a graph, labeling the initial equilibrium point, a few rounds, and the new equilibrium wage and employment level.

Answer #1

Given labor supply curve w=10+2E, labor demand curve w=50-E
therefore in equilibrium 50 - E = 10 + 2E

Thus, 40 = 3E or E = 40/3 = 13.33 and wage level would be W = 50 -
40/3 = 36.67

In the next round w=10+2E and w = 60-E so 60 - E = 10 + 2E thus, 50 = 3E or E = 50/3 = 16.66 and wage level would be W = 60 - 50/3 = 43.34

In the next round it will be w=10+2E and w = 70-E thus E = 20 and wage level would W = 70 - 20 = 50

In the next rounw it will be w=10+2E and w = 80-E thus E = 23.33 and wage level would W = 80 - 23.33 = 56.67

b) Below is the cobweb model which shows each period increment in wage and employment is influenced from previous period results. It starts from initial equilibrium point E = 40/3 = 13.33, W = 50 - 40/3 = 36.67 and moved on to 3 round abouts.

Answer both 8 and 9
8.) The supply curve of labor in a competitive industry is given
by w = 10 + 5 E; and the demand curve for labor is given by w = 50
- 3E. What is the equilibrium wage and employment? Suppose that the
demand for labor increases and the new demand curve is w’ = 70 –
3E. What is the new equilibrium wage and employment level?
9.) Suppose a firm purchases labor in a...

Suppose there are two occupations: tech and service. The demand
and supply of labor in the service occupations are (D): w= 100−5E;
(S): w= 20 +3E, where w is wage and E is employment. In the tech
occupations, the demand and supply of labor are (D): w= 200−2E;
(S): w= 20 +7E
a) What are the equilibrium wages and employments in the two
occupations?
b) Suppose the demand in tech occupation has increased from w=
200−2E to w= 218−2E and...

Suppose that after an influx of immigrants, labor supply in the
market for low-skilled workers is now given by ES = 30w − 180 (was
ES = 30w-300). Labor demand is still ED = 300 − 10w. The government
decided against imposing a minimum wage and the market wage is
freely determined by labor supply and demand.
(a) Are the immigrants perfect substitutes or complements for
native low-skill labor?
(b) Plot the original market equilibrium along with the new
labor...

Suppose the demand and supply of retail workers are (D):
w=150-3E and (S): E= 50+2E, where w is wage and E is
employment.
What are the equilibrium wage and employment? Draw demand and
supply curves.
Suppose the government imposes $80 of minimum wage; how many
workers are unemployed? Draw the impact of the minimum wage on the
graph.
Suppose the government imposes $120 of minimum wage; how many
workers are unemployed? Draw the impact of the minimum wage on the...

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.

Assume that the labour market can be described by the following
supply and demand equations:
S:e = a + bP + cW
D:e = ? + ?P + ? 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 ?. Explain how immigration may shift the
population.
b) Solve for the equilibrium wage and employment level as a
function of the population
STEP BY STEP...

5. Given a typical upward slopping labor supply curve in a
particular labor market of insurance agents. How would the supply
curve change if: Insurance company is facing an increase in the
demand of insurance. 6. Given a typical upward slopping labor
supply curve, and a downward slopping labor demand curve in a
particular labor market of insurance agents. How would the
equilibrium wage change if the insurance company is facing an
increase in the demand of insurance. 2 7....

If the MPN = 24 – N/10, and the labor supply (NS) = 5w (where w
is the real wage), then what are the equilibrium levels of
employment and the real wage?

Consider the supply and demand curves of a labor market.
(a) Argue graphically when a reduction in a payroll tax could
reduce unemployment
(b) Suppose in a labor market
that the wages of another, similar labor market increase. How does
this shift the labor supply and demand curves? What happens to wage
and employment?
(c) Suppose there is a boom in a
particular industry and at the same time, wages for the same types
of workers in a surrounding area...

Given a typical upward slopping labor supply curve, and a
downward slopping labor demand curve in a particular labor market
of insurance agents. How would the equilibrium wage change if the
insurance company is facing an increase in the demand of
insurance.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 29 minutes ago

asked 39 minutes ago

asked 44 minutes ago

asked 45 minutes ago

asked 46 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago