Question

1. In one year you meet 104 people who are each unemployed for one week (and one week only), and twelve people who are each unemployed for the whole year. Each person who was unemployed for only one week was unemployed during the same week with only one other person who was unemployed for only one week. What percent of the unemployed people that you observe in the year are long-term unemployed?

A. 10.3% B. 11.5% C. 85.7% D. 88.5% E. 89.7%

2. Which of the following statements about the labor market is (are) correct?

(x) The supply curve reflects job seekers and the demand curve reflects the jobs that are available.

(y) Workers determine the demand for labor, and firms determine the supply of labor.

(z) The minimum wage is an example of a price floor because the government has mandated a minimum price of labor.

A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (z) only

3. The imposition of a minimum wage that is set above the equilibrium wage in the unskilled labor market will

A. cause the equilibrium wage in the market to rise.

B. cause some workers to get a raise and some workers to lose their job.

C. make every worker who is earning a wage below the minimum better off.

D. make workers earning more than the minimum wage worse off.

E. make it possible for every worker who wants a job at the new minimum wage to find one.

Answer 1

1. In one year you meet 104 people who are each unemployed for one week (and one week only), and twelve people who are each unemployed for the whole year. Each person who was unemployed for only one week was unemployed during the same week with only one other person who was unemployed for only one week. What percent of the unemployed people that you observe in the year are long-term unemployed?

E. 89.7%

People who are employed for 27 weeks or more are termed as long term unemployed so, 12 are long term unemployed. 104 are unemployed for only 1 week each. Total unemployed = 104+12 = 116

So, percent of long term unemployed people = (Long term unemployed/Total unemployed)*100 = (104/116)*100 = 89.7%

2. Which of the following statements about the labor market is (are) correct?

(x) The supply curve reflects job seekers and the demand curve reflects the jobs that are available - Correct

(y) Workers determine the demand for labor, and firms determine the supply of labor - Incorrect because labors are the suppliers and demand for labor is determined by the firms and the wages they pay.

(z) The minimum wage is an example of a price floor because the government has mandated a minimum price of labor.- Correct

C. (x) and (z) only

3. The imposition of a minimum wage that is set above the equilibrium wage in the unskilled labor market will

B. cause some workers to get a raise and some workers to lose their job - the high minimum wage would lead to decrease in demand for labors and hence some workers (unskilled labor) would loose jobs