Draw a supply and demand graph that represents the labor market. Now, assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. What happens to our supply and demand curves? What is the new point of equilibrium? Will the market experience an increase or a decrease in unemployment?
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Draw a supply and demand graph that represents the labor market. Now, assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. What happens to our supply and demand
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- Assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. Draw a supply and demand graph that represents the labor market. Draw a graph that depicts what has happened to our demand and supply curves in the labor market, including our new equilibrium price and quantity of labor. Will the market experience an increase or a decrease in unemployment?Draw a supply and demand graph that represents the labor market. Now, assume that the baby boomer generation is retiring. What happens to our supply and demand curves? What is the new point of equilibrium? Will the market experience an increase or a decrease in unemployment?Assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky. Draw a supply and demand graph that represents the labor market. Draw a graph that depicts what has happened to our demand and supply curves in the labor market, including our new equilibrium price and quantity of labor. Will the market experience an increase or a decrease in unemployment? Make sure you clearly label your graph, all of its components, and any curve shifts are clearly marked with the beginning and ending curves (you can use 0 and 1 or 1 and 2 to designate the first and the second curves).
- After World War II, social norms relating to women’s participation in the labor force relaxed and women were more likely to be employed outside the home. We would expect to see the labor supply curve: Not shift, but move downward along the curve. shift left. shift right. Not shift, but move upward along the curve.Look at the graph below. Labor demand falls from D0 to D1 due to an economic recession. What is the resulting wage in the short-run due to this shift in demand? HINT: Consider whether this is a situation in which the wages are sticky or flexible. Wage $? Look at the graph below. Labor demand falls from D0 to D1 due to an economic recession. What is the resulting wage in the short-run due to this shift in demand? HINT: Consider whether this is a situation in which the wages are sticky or flexible. 40 35 30 Wage Rate 25 20 15 10 5 0 DO DI 5 10 15 20 25 30 35 40 Quantity of LaborUsing your knowledge and understanding of supply and demand analysis to graph the following and explain your graph: (a) an increase in labour productivity. (b) an increase in preference for work. (c) the trade union withdraws labour through a strike.
- Problem 1 Consider the simple (one-period) production model. The production function is Cobb-Douglas, exhibits constant returns to scale, and the exponent on capital equals 0.25.In June 2009, at the trough of the Great Recession, the Bureau of Labor Statistics announced that of all adult Americans, 140,196,000 were employed, 14,729,000 were unemployed, and 80,729,000 were not in the labor force. a) What was the size of the labor force in 2009? Show your work. b) What was the labor-force participation rate in 2009? Show your work. c) What was the unemployment rate in 2009? Show your work.In a particular industry, labor supply is ES = 10 + w and labor demand is ED = 40 - 4w, where E is the level of employment and w is the hourly wage. a. What are the equilibrium wage and employment if the labor market is competitive? What is the unemployment rate? b. Suppose the government sets a minimum hourly wage of $8. How many workers would lose their jobs? How many additional workers would want a job at the minimum wage? What is the unemployment rate?
- Suppose that a country experiences a reduction in productivity – that is, an adverse shock to the production function.A) What happens to the labor demand curve? Show the change on the graph.B) How would this change in productivity affect the unemployment rate if the labor market is always in equilibrium?Explain your answer referring to the graph.Describe the two possible effects that an increase in the wage rate can have on labor supply. Which effect do you expect to dominate under normal circumstances?Using the knowledge of supply and demand analysis to graph the following and explain your graph: (a) an increase in labour productivity. (b) an increase in preference for work. (c) the trade union withdraws labour through a strike.