Question TwoUsing a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.Suppose that the adult population is 210million, and there are 130 million who are employed and 5 million who are unemployed. Calculate the unemployment rate and the labor force participation rate.Define unemployment and explain factors that determine the rate of unemployment given that labor market is in the steady state. Why is the short-run demand curve for labor downward sloping? Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product?

In question 2, it is given that adult population is 210 million and 130 million people are employed…

Answered: Suppose that the adult population is…

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter1: The Art And Science Of Economic Analysis

Section1.A: Appendix: Understanding Graphs

Problem 1AQ

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Question Two

Using a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.
Suppose that the adult population is 210million, and there are 130 million who are employed and 5 million who are unemployed. Calculate the unemployment rate and the labor force participation rate.
Define unemployment and explain factors that determine the rate of unemployment given that labor market is in the steady state.
Why is the short-run demand curve for labor downward sloping? Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product?

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