Questions from Labor Economics

Q: A number of empirical studies suggest that labor demand is very elastic

A number of empirical studies suggest that labor demand is very elastic while labor supply is very inelastic. Assume too that payroll taxes are about 15 percent and legislated to be paid half by the e...

Q: In the United States, labor supply tends to be inelastic relative

In the United States, labor supply tends to be inelastic relative to labor demand, and according to law, payroll taxes are essentially assessed evenly between workers and firms. Given the above situat...

Q: Suppose the supply curve of physicists is given by w = 10

Suppose the supply curve of physicists is given by w = 10 + 5 E, while the demand curve is given by w = 50 - 3 E. Calculate the equilibrium wage and employment level. Suppose now that the demand for p...

Q: a. What happens to wages and employment if the government imposes

a. What happens to wages and employment if the government imposes a payroll tax on a monopsonist? Compare the response in the monopsonistic market to the response that would have been observed in a co...

Q: An economy consists of two regions, the North and the South

An economy consists of two regions, the North and the South. The short-run elasticity of labor demand in each region is -0.5. Labor supply is perfectly inelastic within both regions. The labor market...

Q: Let total market demand for labor be represented by ED = 1

Let total market demand for labor be represented by ED = 1,000 - 50w where ED is total employment and w is the hourly wage. a. What is the market clearing wage when total labor supply is represented b...

Q: Let total market demand for labor be represented by ED = 1

Let total market demand for labor be represented by ED = 1,200 – 30w where ED is total employment and w is the hourly wage. Suppose 750 workers supply their labor to the market perfectly in-elasticall...

Q: A firm faces perfectly elastic demand for its output at a price

A firm faces perfectly elastic demand for its output at a price of $6 per unit of output. The firm, however, faces an upward-sloped labor supply curve of E = 20w – 120 where E is the number of workers...

Q: Ann owns a lawn-mowing company. She has 400 lawns

Ann owns a lawn-mowing company. She has 400 lawns she needs to cut each week. Her weekly revenue from these 400 lawns is $20,000. Given an 18-inch-deck push mower, a laborer can cut each lawn in two h...

Q: Politicians who support the green movement often argue that it is profitable

Politicians who support the green movement often argue that it is profitable for firms to pursue a strategy that is “environmentally friendly” (for example, by building factories that do not pollute a...