1) Consider the effects of a natural disaster like a hurricane on a metropolitan economy. In the initial equilibrium, total employment in the metropolitan araea is 500 000 workers and the daily wage is $100. The price elasticity of suply of labor is 4.0 and the price elasticity of demand for labor is -1.0. Suppose the hurricane reduces labor supply by 100 000 workers. What will be the wage and employment in the new equilibrium?
1) Consider the effects of a natural disaster like a hurricane on a metropolitan economy. In the initial equilibrium, total employment in the metropolitan araea is 500 000 workers and the daily wage is $100. The price elasticity of suply of labor is 4.0 and the price elasticity of demand for labor is -1.0. Suppose the hurricane reduces labor supply by 100 000 workers. What will be the wage and employment in the new equilibrium?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 10PA
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