Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 4.A, Problem 5PA
To determine
The equilibrium wage and quantity of labor.
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Suppose that you have been hired to analyze the impact on employment from the imposition of a minimum wage in the labor market. Further suppose that you estimate the supply and demand functions for labor, where L stands for the quantity
of labor (measured
thousands of workers) and W stands for the wage rate (measured in dollars per hour):
D= 100 - 6W
LS = 4W.
Demand:
Supply:
First, calculate the free-market equilibrium wage and quantity of labor.
The competitive market equilibrium wage is $ per hour. (Enter your response as an integer.)
You are GIVEN the liberty to construct a hypothetical geometric illustration of Labor Market where you measure the
following variables on the specific axis:
A On the vertical axis is the WAGE=the Price of Labor (in Pesos per day)
B. On the horizontal axis is the QUANTITY of Labor demand and supply (in man-hours per day)
REQUIREMENTS:
1. Show the EQUILIBRIUM point by bringing together the DEMAND and SUPPLY of LABOR. Label your graph accordingly.
2. Consider an INCREASE in the wage (as demanded by the labor groups) to a higher level than the equilibrium price for labor.
SHOW geometrically what will happen in the labor market. What problem(s) is/are likely to arise in the labor market?
3. In the face of the problem(s) that are now obtaining in the labor market, what would you recommend as a set of policies or
programs to address such problems. Illustrate your recommendations geometrically (i.e., graphically).
4. The analysis of causation above is LABOR-CENTERED. As a continuing student in…
Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that the profit maximization conditions for hiring labor are as we discussed in class).
If the supply of this kind of labor decreases, we would expect which of the following regarding the equilibrium wage, W, and the equilibrium quantity of labor, L, employed?
Group of answer choices
a) a decrease in W and a decrease L
b) a decrease in W and a decrease L
c) an increase in W and a decrease L
d) a decrease in W and no change in L
e) increase in W and an increase in L
Chapter 4 Solutions
Microeconomics (7th Edition)
Ch. 4.A - Prob. 1RQCh. 4.A - Prob. 2RQCh. 4.A - Prob. 3RQCh. 4.A - Why would economists use the term deadweight loss...Ch. 4.A - Prob. 5PACh. 4.A - Prob. 6PACh. 4.A - Prob. 7PACh. 4.A - Prob. 8PACh. 4.A - Prob. 9PACh. 4 - Prob. 1TC
Ch. 4 - Prob. 2TCCh. 4 - Prob. 4.1.1RQCh. 4 - Prob. 4.1.2RQCh. 4 - Prob. 4.1.3RQCh. 4 - Prob. 4.1.4RQCh. 4 - Prob. 4.1.5PACh. 4 - Prob. 4.1.6PACh. 4 - Prob. 4.1.7PACh. 4 - Prob. 4.1.8PACh. 4 - Prob. 4.1.9PACh. 4 - Prob. 4.1.10PACh. 4 - Prob. 4.1.11PACh. 4 - Prob. 4.1.12PACh. 4 - Prob. 4.1.13PACh. 4 - Prob. 4.1.14PACh. 4 - Prob. 4.2.1RQCh. 4 - Prob. 4.2.2RQCh. 4 - Prob. 4.2.3PACh. 4 - Prob. 4.2.4PACh. 4 - Prob. 4.2.5PACh. 4 - Prob. 4.2.6PACh. 4 - Prob. 4.2.7PACh. 4 - Prob. 4.2.8PACh. 4 - Prob. 4.2.9PACh. 4 - Prob. 4.2.10PACh. 4 - Prob. 4.3.1RQCh. 4 - Prob. 4.3.2RQCh. 4 - Prob. 4.3.3RQCh. 4 - Prob. 4.3.4RQCh. 4 - Prob. 4.3.5PACh. 4 - Prob. 4.3.6PACh. 4 - Prob. 4.3.7PACh. 4 - Prob. 4.3.8PACh. 4 - Prob. 4.3.9PACh. 4 - Prob. 4.3.10PACh. 4 - Prob. 4.3.11PACh. 4 - Prob. 4.3.12PACh. 4 - Prob. 4.3.13PACh. 4 - Prob. 4.3.14PACh. 4 - Prob. 4.3.15PACh. 4 - Prob. 4.3.16PACh. 4 - Prob. 4.3.17PACh. 4 - Prob. 4.3.18PACh. 4 - Prob. 4.3.19PACh. 4 - Prob. 4.4.1RQCh. 4 - Prob. 4.4.2RQCh. 4 - Prob. 4.4.3RQCh. 4 - As explained in the chapter, economic efficiency...Ch. 4 - Prob. 4.4.5PACh. 4 - Prob. 4.4.6PACh. 4 - Prob. 4.4.7PACh. 4 - Prob. 4.4.8PACh. 4 - Prob. 4.4.9PACh. 4 - Prob. 4.4.10PACh. 4 - Prob. 4.2CTE
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