Test 2

Determinant of demand Demand increases or decreases? Drawing Population increases (Buyers) Population decreases (Buyers) Increase in most peoples' income Decrease in most peoples' income Price of substitute increases Price of substitute decreases Price of complementary good increases Price of complementary good decreases Product becomes a popular fad (change in taste of buyers) Product now out of fashion (change in taste of buyers) There is an expectation that the price of the product will soon fall There is a fear that the economy will go into a recession where many firms will fail and unemployment will increase

In 2022, pet food prices have risen sharply but quantity demanded has not fallen much.  It makes sense that the demand for pet food would be ___________ since __________.  Thus, higher prices would lead to ______ revenue for pet food producers.   Inelastic; pet food is more of a luxury good; more Inelastic; people consider their pets to be necessities; more Elastic; pet food takes a small percentage of most consumer’s income; less Unit elastic; pet food is more of a luxury item; less

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 is initially in an economywide equilibrium, with 600,000 people employed in the North and 400,000 in the South at a wage of $15 per hour. Suddenly, 20,000 people immigrate from abroad and initially settle in the South. They possess the same skills as the native residents and also supply their labor inelastically.a. What will be the effect of this immigration on wages in each of the regions in the short run (before any migration between the North and the South occurs)?b. Suppose 1,000 native-born persons per year migrate from the South to the North in response to every dollar differential in the hourly wage between the two regions.What will be the ratio of wages in the two regions after the first-year native labor responds to the entry of the immigrants?c. What will be the effect of this…

You are an economic consultant advising on the market for low-skilled labour. The market has an excess supply of individuals at the market rate. The government wants to increase employment in the labour market. Analyse these three different policies using supply and demand analysis. 1) Get rid of unemployment benefits. 2) Reduce tax paid by firms who employ low-skilled labour. 3) Allow firms to employ at any wage by removing wage protections.

A country is about to let refugees in, but current residents are strongly against it. They are afraid that the wages of low-skilled workers will fall if there is an increase in the available workforce. It is estimated that the country can let in 35,00035,000 refugees, but only 60%60% of them are expected to look for a job. The wage elasticity of labor demand is −0.5−0.5. In the country’s labor market, there are 689,500689,500 low-skilled workers.Calculate the expected wage drop as a percentage, using the midpoint method. Enter your answer as a negative number in the box below and round to one decimal place throughout your calculations.

Suppose that Congress passes a law which requires employers to provide employees some healthcare benefits that raises the cost to the employers by $5 per hour. a) What is the impact on the demand for labor? (Think quantitatively) b) If the employees value the benefit exactly equal to the cost, what will be the impact on the supply of labor? c) How will the law affect the wage and level of employment? Are the employers better off or worse off? Are the employees better off or worse off? d) Suppose before the implementation of the law, the wage in the market was $3 above the minimum wage. In this case, how the law will affect the wage and level of employment?

Which of the following would reduce the supply of microcomputers?     a technological improvement that lowers the cost of producing the computers     higher wage rates for the workers that assemble the computers     a reduction in the price of computer chips used to produce the computers     a reduction in the price of computers

Question 2 Identify what sort of effects the following listed events have. You are required to define the market under study (for example: the labour market, oil market, etc). Explain whether the event acts on the demand or supply side, and whether the event leads to a quantity or price change, or leads to a shift in demand and/or supply. Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply. a) An increase in oil prices as a consequence of a price dispute in the world oil markets b) The implementation of a minimum wage c) The implementation of subsidies to milk producers in Australia d) The implementation of a Carbon tax in the economy. A Carbon tax is charged according to the level of emissions of greenhouse gases in an economy. e) The implementation of an increase in tuition in University studies.

The demand for a normal good rise when the income of the consumer rise. True/False

Many unions attempt to raise the hourly wages received by their members by restricting the supply of workers firms can hire from. Assuming the demand for workers who belong to these unions is inelastic, this would cause:   wages of individual union members and the total (combined) income of union members to increase.   wages of individual union members to increase and the total (combined) income of union members to decrease.   wages of individual union members and the total (combined) income of union members to decrease.   wages of individual union members to decrease and the total (combined) income of union members to increase.

Demand and the price of motor fuel    From 2007 to 2008, the price of gasoline in the United States rose from $2.76 per gallon to $3.20 per gallon. The quantity used decreased from 3,389 million barrels to 3,290 million barrels. In 2009, the price fell to $2.30 per gallon, yet the quantity used continued to decline, to 3,283 million barrels. After-tax personal income increased from 2007 to 2008, but it fell from 2008 to 2009. Which one or more of the following hypotheses do you think best explain(s) the pattern of gasoline sales? Illustrate your chosen hypothesis with an appropriate diagram. a.    In 2008, the demand curve for gasoline had the usual negative slope. However, in 2009, the demand curve shifted to a positively sloped position. b.    The demand curve had a negative slope at all times, but because gasoline is a normal good, the demand curve shifted to the right in 2008 and then to the left in 2009

The demand for skilled workers in the United States has been increasing. To increase the supply of skilled workers, many argue that immigration reform to allow more skilled labor into the United States is needed. Explain whether you agree or disagree.

Suppose the number of workers who are allowed to legally immigrate into the country to perform seasonal work has been cut in half. Wages in the affected industries are likely to............ due to a shift of the labor .................curve. a. increase: demand b. decrease : supply c. increase : supply d. decrease: demand

If wages fall for surgeons but not for family practice doctors, there will be in the market for surgeons and in the market for family practice doctors. a rightward shift of labor supply; a decrease in quantity supplied a leftward shift of labor supply; an inerease in quantity supplied a decrease in quantity supplied; a rightward shift of labor supply an increase in quantity supplied; a leftward shift of labor supply

Suppose in a particular industry 120 people are employed at a wage rate of $4 per hour. Further, suppose the wage rate increases to $6 per hour and as a result the number of people employed in the industry reduces to 90. Compute the elasticity of demand for labour. Interpret the results. Is the demand elastic?

Question 4 If wages increase at a 5% rate and the quantity demanded of labor decreases by 10%, then the elasticity of demand for labor is: 50. 0.5. 2. 10.

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75. Suppose that the government is considering raising the minimum wage from $7.25 per hour to $7.75 per hour. Based on this information, calculate the percentage change in the employment of low skilled workers. Use the midpoint formula?

The supply curve is upward sloping because other things equal, a higher demand means greater quantity supplied. other things equal, a higher income means greater quantity supplied. other things equal, a lower wage means greater quantity supplied. other things equal, a higher price means greater quantity supplied.

Consider the effects of a natural disaster like hurricane Katrina on a metropolitan economy. In the initial (prehurricane) equilibrium, total employment in the metropolitan area is 500,000 workers and the daily wage is $100. The price elasticity of supply of labor is 4.0 and the price elasticity of demand for labor is −1.0. Suppose the hurricane reduces labor supply (a horizontal shift of the supply curve) by 100,000 workers. a. Use a supply-demand graph of the urban labor market to show the effects of the hurricane. b. The equilibrium wage [increases, decreases] by percent (to $ ) computed as. . . . c. The equilibrium employment [increases, decreases] by percent (to workers), computed as. . . . d. The reduction in the equilibrium employment is [greater, less] than the initial decrease in labor supply because. .

Identify what sort of effects the following listed events have.You are required to define the market under study (for example: the labour market, oil market, etc). Explain whether the event acts on the demand or supply side, and whether the event leads to a quantity or price change, or leads to a shift in demand and/or supply.Make sure to explain what sort of assumptions you are making on the elasticities of demand and supply.d) The implementation of a Carbon tax in the economy. A Carbon tax is         charged according to the level of emissions of greenhouse gases in an         economy.e) The implementation of an increase in tuition in University studies

Consider the market for minivans. For each of the events listed, identify which of the determinants of demand are affected. Also indicate whether demand is increased or decreased. A recession reduces average family income. Because of an autoworker strike, people believe that the price of minivans will rise in the future.

A change in consumer’s expectations causes a movement along the demand curve or a shift in the demand curve? Explain. A change in price of the goods results in a movement along the demand curve or a shift in the demand curve? Explain (Word count: 250 words max.) Buyers' expectations about future prices can affect the demand curve. If consumers expect prices to increase, they buy more of a product now, and the demand curve moves to the right. A demand schedule for a normal good is as follows: Price               Quantity demanded  Rs.230                           70 210                                90 190                              110 170                              130 Do you think that the increase in quantity demanded (say, from 90 to 110 in the table) when price decreases (from Rs.210 toRs.190) is due to a rise in consumers’ income? Explain clearly (and briefly) why or why not.   Now suppose that the good is an inferior good. Would the demand schedule still be valid for…

For each of the following changes, determine whether there will be a change in quantity supplied or a change in supply. a change in input costs a change in producer expectations

Identify the correct statement. Group of answer choices Demand for a product is the same as the quantity demanded of a product. Demand is the quantity of a product that producers are willing to produce at a particular price. Demand is the total quantity of a product that people are willing, even if unable, to purchase at a given price. Demand is the quantity of a product that people are willing and able to purchase at different prices. Demand represents the different quantities of a good or service that provides consumers the same amount of utility.

TRUE OR FALSE?   An improvement in the technology will reduce the supply of goods while an increase in cost of production may increase.     A decrease in the cost of production will shift the supply curve to the left. An increase in the cost of production will shift the supply curve to the right.     The consumer’s income does not influence the demand for goods and services. The increase in demand due to an increase in income is not experienced in the economy.

All of the following are non-price determinants of demand except *         income       number of buyers       tastes and preferences       costs incurred in buying the product

Suppose that Santa Fe County, New Mexico officials propose establishing a county "living" wage of $15.00 per hour that all employers must pay. Suppose that the equilibrium in the Santa Fe County labor market for unskilled labor is $9.00 per hour with employment of 12,000. Assuming that the elasticity of demand for unskilled labor in Santa Fe County is 1.25, what is the expected reduction in employment if the higher minimum were established? (Use elasticity calculations assuming the competitive equilibrium as the base point.) (continuation of above) Suppose that the elasticity of supply to this labor market is 1.25. Find the change in supplier surplus that would occur if the higher minimum wage were enacted ***Need the bottom answer, can't figure out how to solve for it****