c. Suppose that the markup of the prices of products over wage cost, z, is 10%, and that the wage-setting equation is W = P(1– 2m + z). Where m is the unemployment rate and z is the unemployment benefit/minimum wage. What is the real wage, as determined by the price-setting equation? i. ii. Solve for the natural rate of unemployment

c. Suppose that the markup of the prices of products over wage cost, z, is 10%, and that the wage-setting equation is W = P(1– 2m + z). Where m is the unemployment rate and z is the unemployment benefit/minimum wage. What is the real wage, as determined by the price-setting equation? i. ii. Solve for the natural rate of unemployment

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter26: Earnings, Productivity, And The Job Market

Section: Chapter Questions

Problem 11CQ

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Scenario 1 Suppose the marginal product of labor in the economy is given by MPN-200-0.5N, while the supply of labor is 300+8w Refer to Scenario 1. What is the market clearing real wage? Ow=5 Ow-11 Ow-10 Ow-15
I. Suppose that the markup of goods prices over marginal cost is 3% and that the wage-setting (WS) equation is W = P(1 – u), where u is the unemployment rate. a. What is the real wage, as determined by the price-setting (PS) equation? b. What is the natural rate of unemployment? c. Suppose that the markup of prices over costs increases to 6%. What happens to the natural rate of unemployment? Explain the logic behind your answer.
Please no written by hand solutions Suppose that the markup of goods prices over marginal cost is 5%, and that the wage-setting equation is W= P(1-u), where u is the unemployment rate. a. What is the real wage, as determined by the price-setting equation? b. What is the natural rate of unemployment? c. Suppose that the markup of prices over costs increases to 10%. What happens to the natural rate of unemployment? Explain the intuition behind your answer.
Suppose that the markup of goods prices over marginal cost is 6%, and that the wage-setting equation is W=P(1-u) where u is the unemployment rate. a. What is the real wage, as determined by the price-setting equation? b. What is the natural rate of unemployment? c. Suppose that the markup of prices over costs increases to 11%. What happens to the natural rate of unemployment?
J 7 (1) Suppose that the mark-up of goods prices over marginal cost is 25% (0.25), and the wage setting equation is given by W=P(1-5u). Calculate the real wage, as determined by the price-setting equation. (2) Consider (1). Solve for the natural rate of unemployment.
c. Describe the relationship between the size of the employment rent and (i) the expected duration of unemployment (ii) the size of the unemployment benefit per hour and (iii) the size of the psychological cost of unemployment per hour
1. The marginal product of labor for a firm is defined by the following equation: MPN = A(100- N)" a. If the price of this firm's output is $2.00 and productivity is 1.0, what will be the firm's demand for labor if the nominal wage is $10. If the wage is $20? b. Repeat part a after doubling productivity.
10 DRAW A GRAPH. WITHOUT GRAPH THUMBS DOWN!Suppose the markup of goods prices over marginal cost is 2% and the wage-setting equation is W=P(1-u) with u being the unemployment rate.1. What is the Natural level on Unemployment?2. What is the real wage as determined by the price setting equation?3. If the markup increases to 2.5% due to an increase in the price of Oil what happens to the natural rate of employment? Explain briefly and graphically this change.
Suppose a firm’s hourly marginal product of labour is given by MPN = 0.2(200 − N), where N is the number of labour hours used in production. The amount of labour supplied by workers, NS, is given by NS = 100 + 5w, where w is the real wage. (a) Suppose the current real wage is equal to 20. How much labour will the firm want to hire? How much labour will the workers want to supply? Is there excess supply or excess demand of labour in the economy? Do you expect the real wage to go up or go down in this case? (b) Find the equation of the labour demand and calculate the equilibrium levels of real wage and full-employment. (c) If the government decides to tax the labour income, the equation of labour supply becomes NS = 100 + 5(1 − τ )w. Suppose τ = 40%. Repeat part (b). Compared to the results in (b), do the equilibrium levels of real wage and full-employment increase or decrease? Provide an intuitive explanation to your answers.
A6 Show that the real wage implied by price-setting behaviour is a constant fraction of the marginal product of labour. How does this share vary with the intensity of product market competition? Explain intuitively.
if a worker receives a raise in their nominal wage from $10 t0 $15 per hour at the same time the price level doubles, the worker's real rage has approximately: A: increased by 50% B: Incerased by 100% C: dECREASED BY 50% D: Decreased by 33% with explanation
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