CHAPTER 5
5-1. Suppo the labor supply curve is upward sloping and the labor demand curve is downward sloping. The study of economic trends over a particular time period reveals that the wage recently fell while employment levels ro. Which curve must have shifted and in which direction to produce this effect?
斯坦福商学院
If the supply curve does not shift, all wage and employment movements must occur along the supply curve, so that the wage rate and the employment level must move in the same direction. Becau the wage went down while employment went up in the situation described in the question, it must have been the ca that the supply curve shifted outwards (to the right). We do not have enough information to determine whether the demand curve shifted as well.
六年级下册古诗词5-2. It takes time to produce a new economist, and prospective economists ba their career decision by looking only at current wages across various professions. Further, the labor supply curve of economists is much more elastic than the labor demand curve. Suppo the market is now in equilibrium, but that the demand for economists suddenly ris becau a new activist government in Washington wants to initiate many new programs that require the input of economists. Illustrate the trend in the employment and wages of economists as the market adjusts to this increa in demand.
Initially, the market is in equilibrium at a wage w0 and an employment level of E0. The increa the demand for economists results in a new equilibrium wage of w1 and a new equilibrium employment level of E1. However, the demand for economists in the short-run is inelastic at E0, so the demand increa simply leads to a ri in the wage of economists (as indicated by point 1). In the next period, students believe this wage will persist and oversupply the market so that the cobweb leads to a new wage at point 2. In the next period, students undersupply (becau the wage is too low) and the cobweb leads to a new wage at point 3, and so on. Becau of the relative elasticities of supply and demand (as drawn), the cobweb is exploding and will never converge to a stable equilibrium.
5-3. Suppo the supply curve of physicists is given by w = 10 + 5E , while the demand curve is given by w = 50 – 3E . Calculate the equilibrium wage and employment level. Suppo now that the demand for physicists increas and the new demand curve is given by w = 70 – 3E . Assume this market is subject to cobwebs. Calculate the wage and employment level in each round as the wage and employment levels adjust to the demand shock. (Recall that each round occurs on the demand curve – when the firm posts a wage and hires workers). What is the new equilibrium wage and employment level?
The initial equilibrium is given by 10 + 5E = 50 – 3E . Solving the two equations simultaneously implies that w = $35 and E S = E D = 5. When demand increas to w = 70 – 3E , the new equilibrium wage is $47.5 and the equilibrium level of employment is 7.5.
Round Wage Employment
中国梦我的梦论文1 $55.0 5
2 $43.0 9
3 $50.2 6.6
4 $45.9 8.0
5 $48.4 7.2原始英文
6 $46.9 7.7
7 $47.8 7.4打印机安装
8 $47.2 7.6
腌制生姜The table gives the values for the wage and employment levels in each round. The values in the table are calculated by noting that in any given period the number of physicists is inelastically supplied, so that the wage is determined by the demand curve. Given this wage, the number of economists available in the next period is calculated. By round 7, the market wage rate is within 30 cents of the new equilibrium.
01 w 1
w 0
W age
5-4. The 1986 Immigration Reform and Control Act (IRCA) made it illegal for employers in the United States to knowingly hire illegal aliens. The legislation, however, has not reduced the flow of illegal aliens into the country. As a result, it has been propod that the penalties against employers who break the law be incread substantially. Suppo that illegal aliens, who tend to be less skilled workers, are complements with native workers. What will happen to the wage of native workers if the penalties for hiring illegal aliens increa?
A substantial increa in the penalties associated with hiring illegal aliens will likely reduce the number of illegal aliens entering the United States. The effect of this shift in the size of the illegal alien flow on the marginal product (and hence the demand curve) of native workers hinges on whether illegal aliens are substitutes or complements with natives. As it is assumed that natives and illegal aliens are complements, a cut in the number of illegal aliens reduces the value of the marginal product of natives, shifting down the demand for native labor, and decreasing native wages and employment.
5-5. Suppo a firm is a perfectly discriminating monopsonist. The government impos a minimum wage on this market. What happens to wages and employment?
A perfectly discriminating monopsonist faces a marginal cost of labor curve that is identical to the supply curve. As a result, the employment level of a perfectly discriminating monopsonist equals the
employment level that would be obrved in a competitive market (at E *) The imposition of a minimum wage at w MIN leads to the same result as in a competitive market: the firm will only want to hire E D workers as w MIN is now the marginal cost of labor, but E S workers will want to find work at the minimum wage. Thus, the wage increas, but employment falls.
新邵县人民政府网
Dollars
E w w *S D
5-6. What happens to wages and employment if the government impos a payroll tax on a
monopsonist? Compare the respon in the monopsonistic market to the respon that would have been obrved in a competitive labor market.
Initially, the monopsonist hires E M workers at a wage of w M . The imposition of a payroll tax shifts the demand curve to VMP ′, and lowers employment to E ′ and the wage to w ′. Thus, the effect of imposing a payroll tax on a monopsonist is qualitatively the same as imposing a payroll tax in a competitive labor market: lower wages and employment. (It is interesting to note that the same result comes about if the payroll tax is placed on workers, so that the labor supply and marginal cost of labor curves shift as oppod to labor demand.)
5-7. An economy consists of two regions, the North and the South. The short-run elasticity of labor demand in each region is –0.5. The within-region labor supply is perfectly inelastic. The labor
market is initially in an economy-wide equilibrium, with 600,000 people employed in the North and 400,000 in the South at the wage of $15 per hour. Suddenly, 20,000 people immigrate from abroad and initially ttle in the South. They posss the same skills as the native residents and also supply their labor inelastically.
(a) What will be the effect of this immigration on wages in each of the regions in the short run (before any migration between the North and the South occurs)?
There will be no effect on the North’s labor supply in the short run, so the wage rate will not change there. In the South, labor supply will have incread by 5 percent, so the wage rate must fall by 5/(0.5) = 10 percent (recall that the elasticity of labor demand is -0.5, so a one percent decrea in wages would have been generated by a 0.5 percent expansion of the labor supply). The new hourly wage in the South, therefore, is $13.50 and total employment in the South is 420,000.
Dollars
Employment
w M w ′
也是幸运(b) Suppo 1,000 native-born persons per year migrate from the South to the North in respon to every dollar differential in the hourly wage between the two regions. What will be the ratio of wages in the two regions after the first year native labor responds to the entry of the immigrants?
After the initial migration, we have en that wages in the South are $13.50 while wages in the North are $15. This difference leads 1,500 natives migrating from the South to the North in the first year. Employment in the North after one year, therefore is 601,500. Moreover, as the elasticity of labor demand in the North is -0.5 and employment has incread by 0.25 percent, the Northern wage falls by 0.5 percent to roughly $14.93. Likewi, employment in the South after one year is 418,500. As the elasticity of labor demand is -0.5 and employment has decread by 0.3571 percent, the Southern wage increas by
0.71428 percent to roughly $13.60. Thus, the ratio of the Northern to Southern wage after one year is
1.09779.
(c) What will be the effect of this immigration on wages and employment in each of the regions in the long run (after native workers respond by moving across regions to take advantage of whatever wage differentials may exist)? Assume labor demand does not change in either region.
In the long run, people must move from the South to the North to equalize the wage rates in the two regions. Since the wages were equal in the two regions before the influx of immigrants, and they also must be equal after things ttle down, the proportional decrea in the wage rate should be the same in the North and in the South. Becau the elasticity of labor demand is the same in the two regions, this last obrvation implies that the percentage increa in employment in the North must be the same as the percentage increa in employment in the South. Thus, as 60 percent of the original workers were employed in the North, 60 percent of the 20,000 increa in Southern employment will eventually migrate to the North. In the long run, therefore, total Northern employment will be 612,000 while total Southern employment will be 408,000. (Note: there is no presumption that only immigrants further migrate to the North.) In each region, therefore, employment increas by 2 percent in the long run, i.e., 12,000 is 2 percent of 600,000 and 8,000 is 2 percent of 400,000. (This can also be en immediately as 20,000 is 2 percent of the 1 million workers.) Now, given that the elasticity of labor demand is -0.5, the 2 percent increa in employmen
t will cau the wage rate to fall by 4 percent. Hence, the long-run equilibrium hourly wage will be $14.40.
5-8. Chicken Hut faces perfectly elastic demand for chicken dinners at a price of $6 per dinner. The Hut also faces an upward sloped labor supply curve of
E = 20w – 120,
where E is the number of workers hired each hour and w is the hourly wage rate. Thus, the Hut faces an upward sloped marginal cost of labor curve of
MC E = 6 + 0.1E.
Each hour of labor produces 5 dinners. (The cost of each chicken is $0 as the Hut receives two-day old chickens from Hormel for free.) How many workers should Chicken Hut hire each hour to maximize profits? What wage will Chicken Hut pay? What are Chicken Hut’s hourly profits?
