Question

In: Economics

3. Suppose the demand for labor is given by LD = 12 – 1/5 W (or...

3. Suppose the demand for labor is given by LD = 12 – 1/5 W (or W = 60 – 5L), and the domestic supply of labor is given by LS = W – 6 (or W = L + 6)

a) Calculate the market-clearing quantity of labor and the wage and graph (and label) everything:

L* = ____________

W* = ___________

b) Suppose that newly arriving immigrants have LS = 2W – 12 and are as productive as domestic workers. What is the new joint labor supply function? (hint: add up the labor supply functions horizontally, not vertically)

c) What is the new market-clearing quantity of labor and the wage?

W* = __________

L* = __________

L domestic = __________

d) How many domestic workers are no longer working as a result of immigration?

Solutions

Expert Solution

a) At equilibrium, labor demand = labor supply

60 - 5L = L + 6

L = 9

At this L, W = 15

b) Supply curve of immigrants: Ls = 2W - 12

New joint labor supply function: 3W - 18

c) At new equilibrium, 12 - 0.2W = 3W - 18

W = 9.375

d) At wage of 9.375, domestic supply of labor is 3.375 which demand is 10.125 which result in domestic labor unemployed of 10.125 - 3.375 = 6.75


Related Solutions

Labor demand: Ld = 210 – 2W Labor supply: Ls = 120 + W W =...
Labor demand: Ld = 210 – 2W Labor supply: Ls = 120 + W W = the wage rate. If the government sets the minimum wage rate at $40 per hour, Ld or employment will decline by ___ (compare with equilibrium employment). Select one: A. 5 B. 10 C. 15 D. 20 E. 25
1. Demand for labor in a country is given by Ld = 80 − Zw. Z...
1. Demand for labor in a country is given by Ld = 80 − Zw. Z is a factor that affects the elasticity of the demand for labor. When Z is small, labor demand is inelastic, and when Z is large, labor demand is elastic. Domestic labor supply is given by Ls(D) = w and immigrant labor supply is given by Ls(I) = 20. (a) Find the market equilibrium wage and employment when no immigration is allowed. (b) Find the...
LABOR MARKET CONDITIONS: BASICS Suppose the demand for high school teachers (Ld) satisfies the equation: Ld...
LABOR MARKET CONDITIONS: BASICS Suppose the demand for high school teachers (Ld) satisfies the equation: Ld = 3,000 – 35W, where L is the number of high school teachers (measured in thousands of persons) and W is the high school teacher salary (measured in thousands of dollars). Suppose the supply of high school teachers (Ls) satisfies the equation: Ls = -500 + 25W. 1. Using the information above, demonstrate and explain how many high school teachers will be employed (remember,...
Suppose the demand for fast food workers can be defined a labor demand equation of LD...
Suppose the demand for fast food workers can be defined a labor demand equation of LD = 95-3w. All fast food workers are covered by the minimum wage and it is binding. Will an increase in the minimum wage from $7.25 to $9.00 per hour increase, decrease, or have no effect on the aggregate earnings of fast food workers?
5. Suppose we have the following information about the market for labor: Demand for labor: w...
5. Suppose we have the following information about the market for labor: Demand for labor: w = 9 - 3L Supply of labor: w = 3 + 5L L = hundreds of thousands of hours per week w = real wage in dollars per hour, base year dollars. Find the equilibrium wage and quantity of labor employed. After a wage increase of 25%, how many people are unemployed?
Suppose the labor market can be described by the following: Labour demand: LD = 880 –...
Suppose the labor market can be described by the following: Labour demand: LD = 880 – 50W, where W = wage per hour Labour supply: LS = 40W – 200 The initial equilibrium wage is $12 per hour and the level of employment is 280. Suppose firms are paying their worker $15 per hour, find a change in the level of unemployment. Answer: For numerical answers, just enter the numbers (i.e., no unit of measurement, no comma). For example, if...
Suppose a firm has a labor demand curve given by w = 20 - 0.01E. Furthermore,...
Suppose a firm has a labor demand curve given by w = 20 - 0.01E. Furthermore, suppose that the union representing workers in the firm derives utility from the wage rate and the level of employment according to the utility function U = w · E where the marginal utility of an increase in the wage is MUw = E and the marginal utility of an increase in employment is MUE =w. (a) Graphically depict the union's utility-maximization problem, as...
Labor Supply in an industry is given by ES = 10 + w and labor demand...
Labor Supply in an industry is given by ES = 10 + w and labor demand is given by ED = 40 − 4w, where E is the level of employment and w is hourly wage rate. 1) Draw the supply and demand curves and find the competitive equilibrium wage and employment level. 2) What is the unemployment rate at this equilibrium? 3) Calculate the producer and worker surplus 4) Suppose that the government imposes a minimum wage of $8...
Suppose a perfectly competitive labor market has a demand curve of LD = 120 − 2w...
Suppose a perfectly competitive labor market has a demand curve of LD = 120 − 2w and a supply curve of LS = 8w, where w is the wage rate is dollars per hour and L is the quantity of labor in person-hours. (a) (2 points) What are the equilibrium values of the wage and employment? (b) (4 points) Suppose the government imposed a minimum wage of $14 per hour. Now what are the equilibrium values of the wage and...
Inverse Labor Supply is w=5L. The Inverse Labor Demand curve is w=100-20L Suppose there is a...
Inverse Labor Supply is w=5L. The Inverse Labor Demand curve is w=100-20L Suppose there is a negative production externality that costs society $50 per unit of labor hired. 1. what is the social marginal benefit curve now, and why is it not the same as labor demand curve? 2. what is the socially optimal level of employment 3. what is the dead-weight loss associated w/ CME? 4. what is the dead-weight loss associated w/ the monopsony? 5. is the monopsony...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT