Suppose that you find that the labor market is out of equilibrium, in this case we...

Suppose that you find that the labor market is out of equilibrium, in this case we know that:

a. The economy is producing potential output

b. The economy may be in an expansion or recession

c. Prices can be lower than expected prices

d. The unemployment rate is composed of structural and frictional unemployment only

Solutions

Expert Solution

Ans. b) the economy may be in expansion or recession.

When labor force is less than in an equilibrium, the economy is in a recession. When the labor force is more than in an equilibrium, the economy is experiencing an expansion.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose that the equilibrium wage in the labor market is $8.00 per hour of labor. If...

Suppose that the equilibrium wage in the labor market is $8.00 per hour of labor. If a law increased the minimum wage from $7.25 to $10.00 per hour of labor, then A. both consumer surplus and producer surplus increase since the new price is higher. B. the resulting increase in producer surplus would be larger than any possible loss of consumer surplus. C. the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus. D....

Suppose a country has a labor market in equilibrium. Next, suppose that a surge of people...

Suppose a country has a labor market in equilibrium. Next, suppose that a surge of people choose to immigrate into the country to search for economic opportunity. Suppose, just before the surge of immigrants began, the country’s people voted to approve a minimum wage law equal to the equilibrium wage that prevailed before the surge. Using the supply and demand model, explain what happens in the labor market.

Suppose the manufacturing labor market, which is nonunionized, is in equilibrium at a wage equal to...

Suppose the manufacturing labor market, which is nonunionized, is in equilibrium at a wage equal to $25. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $30 per hour. After the workers become unionized, how many workers do manufacturing firms collectively hire? 160 workers 200 workers 240 workers There is not enough information to determine the number of workers. After an employer pays the cost of educating a worker,...

Suppose the market demand is Q=100-P. You are asked to find out how this market operates...

Suppose the market demand is Q=100-P. You are asked to find out how this market operates under perfect competition, monopoly and oligopoly, with the same market demand and cost structure for each firm. Suppose the industry is perfectly competitive. The long-run cost function of each firm is c(Q)=2Q. Calculate the market price, total quantity supplied of the market, and each firm’s profit (in the long run). Suppose there is a single firm serving the whole market, i.e. it is a...

If the labor market was in equilibrium with a market wage of $10 an hour and...

If the labor market was in equilibrium with a market wage of $10 an hour and the state of NJ implement a min wage law of $15 an hour. Explain what type of policy Murphy implemented impact this will have on the market. (i.e price floor or price ceiling) Hint Draw the graph and explain in detail this markets the labor market will have.

The labor market equilibrium is an equilibrium where the economy is considered to be at full...

The labor market equilibrium is an equilibrium where the economy is considered to be at full employment. This occurs when: a. The frictional unemployment rate is zero b. The unemployment rate is zero c. The structural unemployment rate is zero d. The cyclical unemployment rate is zero

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 we have a perfectly competitive market where at the equilibrium price the total market demand...

Suppose we have a perfectly competitive market where at the equilibrium price the total market demand is 300 units. Each individual firm in the market has a cost function C(Q) = 50 -2Q + 0.4Q^2. The number of firms this market can support in the long run is _____?

5) If the labor market was in equilibrium with a market wage of $10 an hour...

5) If the labor market was in equilibrium with a market wage of $10 an hour and the state of NJ implement a min wage law of $15 an hour. Explain what type of policy Murphy implemented impact this will have on the market. (i.e price floor or price ceiling) Hint Draw the graph and explain in detail this markets the labor market will have

Suppose you are studying the market for employees in a given competitive labor market in the...

Suppose you are studying the market for employees in a given competitive labor market in the US. The labor supply is given by: Supply : w = L+2 where w is the wage per hour worked and L is the number of employees in thousands. The demand for labor in this industry is given by: Demand : w = 20 − L, with L the number of employees in thousands. (a) Based solely on the information given, can leisure be...

Subjects