Question
In: Economics
Suppose low skilled labor and capital are substitutes but high skilled labor and capital are complements....
- Suppose low skilled labor and capital are substitutes but high
skilled labor and capital are complements. Over the past 45 years
the price of capital has dropped substantially because of the
computer revolution. Draw and explain 2 labor market diagrams
- To show what has happened to the demand for high and low skilled labor
- Now add new supply curves to your diagrams to show the effect of an increase in the number of high skilled workers and a decrease in the number of low skilled workers.
- What has happened to the wage rates of high and low skilled workers? Make sure your answer to (c) is shown in your diagrams. [10 points]
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Consider the markets for low-skilled and high-skilled labor. a. Suppose the government introduces a subsidy to...
Consider the markets for low-skilled and high-skilled labor.
a. Suppose the government introduces a subsidy to the
employment of low-skilled workers physically paid to firms. (For
simplicity, assume the government pays firms some amount for each
low-skilled worker they hire.) How will the subsidy affect the
employment of low-skilled workers, the wage low-skilled workers
receive, and net of-subsidy wage for low-skilled workers paid by
firms? Will this policy tend to increase, decreaseor have no effect
on income inequality (or is...
Consider the markets for low-skilled and high-skilled labor. a. Suppose the government introduces a subsidy to...
Consider the markets for low-skilled and high-skilled labor.
a. Suppose the government introduces a subsidy to the employment
of low-skilled workers physically paid to firms. (For simplicity,
assume the government pays firms some amount for each low-skilled
worker they hire.) How will the subsidy affect the employment of
low-skilled workers, the wage low-skilled workers receive, and the
netof-subsidy wage for low-skilled workers paid by firms? Will this
policy tend to increase, decrease, or have no effect on income
inequality (or...
Consider the markets for low-skilled and high-skilled labor in the United States. Describe how each of...
Consider the markets for low-skilled and high-skilled labor in
the United States. Describe how each of the following developments
is likely to affect the wages of low-skilled workers relative to
high-skilled workers.
a) There is an increased demand for apps and smart appliances,
which are produced by high-skilled workers.
b) The government pays employers a subsidy for each low-skilled
worker they employ.
c) Some low-skilled workers get more education, and so become
high-skilled workers.
7) Consider the markets for low-skilled and high-skilled labor in the United States. Draw two graphs...
7) Consider the markets for low-skilled and high-skilled labor
in the United States. Draw two graphs how each of the following is
likely to affect the wages of low-skilled workers relative to
high-skilled workers.
a) Suppose that the government decided to approve more H-1B visa
for high-skilled workers. In other words, more high-skilled workers
come to the U.S. from foreign countries.
b) The aging of the U.S. population increases the demand for
services such as home health care, home maintenance,...
Suppose that there are two types of workers in the labor market, type A (low skilled)...
Suppose that there are two types of workers in the labor market,
type A (low skilled) and type B (high skilled). The market for type
A is at equilibrium while the market for type B workers currently
exhibits a surplus of workers. Discuss the effect of the
introduction of a minimum wage in the market for type A workers on
the quality of workers hired in the type A market and on the
distribution of workers across the two markets...
Suppose that there are two types of workers in the labor market, type A (low skilled)...
Suppose that there are two types of workers in the labor market,
type A (low skilled) and type B (high skilled). The market for type
A is at equilibrium while the market for type B workers currently
exhibits a surplus of workers. Discuss the effect of the
introduction of a minimum wage in the market for type A workers on
the quality of workers hired in the type A market and on the
distribution of workers across the two markets...
substitutes, complements, or unrelated
substitutes, complements, or unrelated
A firm uses skilled labor, unskilled labor, and capital, and is initially in equilibrium. Suppose that...
A firm uses skilled labor, unskilled labor, and capital, and is
initially in equilibrium. Suppose that the wage paid to unskilled
labor falls, and that unskilled labor is a substitute in production
with both skilled labor and capital. Depict in separate graphs of
(a) capital and unskilled labor and (b) capital and skilled labor
how the original equilibrium choices change in response to the
decline in wages paid to unskilled workers. What are the expected
impacts on the wage and...
Suppose there exist two labour markets — one for low-skilled, and one for high-skilled workers. Any...
Suppose there exist two labour markets — one for low-skilled,
and one for high-skilled workers. Any low-skilled worker can become
a high-skilled worker by investing in education, the cost of which
is c. (a) What, if any, wage gap would exist between low- and
high-skilled workers in equilibrium? Explain. (b) Now suppose that
an improvement in technology raises the productivity of low-skilled
workers. Explain the process by which the markets would adjust to a
new equilibrium.
Suppose there are two inputs in the production function, labor and capital, which are substitutes. The...
Suppose there are two inputs in the production function, labor
and capital, which are substitutes. The current wage is $10 per
hour and the current price of capital is $25 per hour.
Given the following information on the marginal product of
labor and the marginal product of capital, find the firm’s
profit-maximizing input mix (i.e. number of workers and units of
capital) in the long-run. Show your work and explain.
L
MPL
K
MPK
1
125
1
130
2
100...
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