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The demand and supply equations are Qd = 100 – 10P and Qs = 30 + 5P. Compute for the
Price equilibrium and quantity equilibrium.
5. In a particular industry, labor supply is L
S = 10+W and labor demand is L
D = 40−4W,
where L 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? [7]
(b) Suppose the government sets a minimum hourly wage of M8.
(i) How many workers would lose their jobs? [4]
(ii) How many additional workers would want a job at the minimum wage? [2]
(iii) What is the unemployment rate? [2]
(c) Suppose the hourly wage is M10 and the price of each unit of capital is M25. The
price of output is constant at M50 per unit. The production function is
f(L, K) = L
1/2K1/2
so that the marginal product of labor is
MPL = (1/2)(K/L)
1/2
If the current capital stock is fixed at 1,600 units, how much labor should the firm
employ in the short run? How much profit will the firm earn?
Consider an individual with M5000 of annual nonlabour income. She has total available
time (T) of 80 hours per week, for 52 × 80 = 54160 hours per year. Her current wage
rate is M15.00 per hour, and she currently chooses to work 2000 hours in a year.
(a) Draw a labour-leisure diagram, carefully illustrating her current labour supply
decision. [10]
(b) The wage rate rises to M18.00 per hour, and she decides to work 2040 hours.
At M18.00 per hour, if she worked 2200 hours per year, she would have been
indifferent to her original work decision (in part (a)). Show her new choice on
a diagram, and calculate the income and substitution effects associated with the
wage change. Calculate the compensated and uncompensated elasticities of labour
supply implied by her response to the wage increase.
Explain with the aid of a diagram the effect on the price of cocoa on an increase in the demand for beverages
Make up an example of a monthly demand schedule for pizza, and graph
the implied demand curve. Give an example of something that would shift
this demand curve, and briefly explain your reasoning. Would a change in the price of pizza
shift this demand curve
Consider a couple’s decision about how many children to have. Assume that over
a lifetime couple has 20,000 hours of time to either work or raise children. The
wage is $10 per hour. Raising a child takes 20,000 hour time.
(a) Draw the budget constraint showing the trade- off between lifetime
consumption and number of children. (Ignore the fact that children come only
in whole numbers.) Show indifference curves and optimum choice.
(b) Suppose the wages increases to $12 per hour. Show the budget constraint shifts.
Can you please explain me when wages will increase then what to do...
Snacks and Cold Drinks are much more expensive at airports and multiplexes than in a retail shop, even though they cost a similar amount to producers”. Is this scenario realistically feasible? Which market structure(s) do you think this is commonly observed? How would you explain the producer behavior in such markets? Logically analyze your argument and draw graphs if necessary.
If the cost of producing an inferior product rises and peoples income increases at the same time the equilibrium will?
In the United States, 2020 is an election year. The current President, Donald Trump, has stated that he cannot say whether he will accept the results from the upcoming election, in which he is a candidate.
a) From a game theory perspective, why is it to his advantage to state this, assuming that the other candidates will follow the regular ethics of the elections? (15 points)
b) What if you do not assume that the other candidates will follow the regular election ethics? How would this affect US democracy? (15 points)
9. Consider the following events: Scientists reveal that eating oranges decreases the risk of diabetes, and at the same time, farmers use a new fertilizer that makes orange trees produce more oranges. Illustrate and explain what effect these changes have on the equilibrium price and quantity of oranges.
