Problem 2.6. Present your answers in the figure below, and write your answers in the boxes. wage ($/worker) Labor Supply 150 125 100 75 50 Labor Demand 25 0 25 50 75 100 125 150 labor (ths. workers/day) (a) Present the effect of the wage subsidy in the figure. thousand workers per day (b) (c) falls to rises to stays the same at $ per worker (d) falls to rises to stays the same at $ per worker (e) Cost to taxpayers: $ per day. Total surplus falls by $ per day.
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The wage subsidy is a form of government intervention that aims to increase the wage received by workers. This means that the wage received by workers will be higher than the wage paid by employers. To represent this in the figure, we can shift the labor supply Show more…
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1.2 Answer the next question on the basis of the following information about a hypothetical economy: Full-time employed = 80 Part-time employed = 25 Unemployed = 15 Discouraged workers = 5 Members of underground economy = 6 (They should be part of the labour force?) Consumer Price Index = 110 The official unemployment rate in the above economy is: A. 18.8% B. 12.5% C. 16.7% D. 25%
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b. Use your answer from part (a) to complete this statement: If workers are paid million available workers and $-$ million workers $-1$ will be hired. c. In 2007 , the federal minimum wage was set at $\$ 5.15$ per hour. Substitute 5.15 for $p$ in the demand model, $p=-0.325 x+5.8,$ and determine the millions of workers employers will hire at this price. d. At a minimum wage of $\$ 5.15$ per hour, use the supply model, $p=0.375 x+3,$ to determine the millions of available workers. Round to one decimal place. e. At a minimum wage of $\$ 5.15$ per hour, use your answers from parts (c) and (d) to determine how many more people are looking for work than employers are willing to hire.
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Assume that the real wage in an economy is held above equilibrium. Graphically illustrate how an increase in demand for labor will change the number of unemployed workers. Be sure to label the axes and the quantities of labor hired before and after the increase in demand. b. Explain in words what happens to the number of unemployed as a result of this change.
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