Graph a labor supply curve with an upward-sloping labor supply. Label the vertical axis as “wage...

Graph a labor supply curve with an upward-sloping labor supply. Label the vertical axis as “wage rate” and the horizontal axis with “Quantity of labor”

a. Place these two points on the curve: {wage= $10, quantity = 30} and {wage = $12, quantity = 45}. Calculate the labor supply elasticity.Label this curve as “Curve A”

b. Now, assume that something has changed the labor supply curve so that now the line has a different slope. On this new curve are the points {wage = $10, quantity = 30} and {wage = $12, quantity = 37}. Calculate the new labor supply elasticity. Draw this curve on the same graph as Curve A, label this new curve “Curve B

c. Is the new curve MORE elastic or LESS elastic? ______________

d. Offer a possible explanation about what might have happened to make this change.

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Expert Solution

Rahul Sunny answered 1 year ago

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