1. Use Supply and Demand graphs to illustrate the labor market and also the housing market in a given location. For each problem below provide a brief explanation and illustrate using a graph. a. Firms in this location experience a productivity shock that increases their productivity. How does this impact the labor market in this location? Are equilibrium wages higher or lower than they were before the productivity shock? Will the labor market in the location be hiring more or less workers than before the productivity improvement? b. How will the changes in the labor market impact the demand for housing in your location? Use your graph to illustrate. c. What will happen to price and the quantity of housing units if housing supply is very elastic in your location? Use a housing market graph to illustrate.

1. Use Supply and Demand graphs to illustrate the labor market and also the housing market in a given location. For each problem below provide a brief explanation and illustrate using a graph. a. Firms in this location experience a productivity shock that increases their productivity. How does this impact the labor market in this location? Are equilibrium wages higher or lower than they were before the productivity shock? Will the labor market in the location be hiring more or less workers than before the productivity improvement? b. How will the changes in the labor market impact the demand for housing in your location? Use your graph to illustrate. c. What will happen to price and the quantity of housing units if housing supply is very elastic in your location? Use a housing market graph to illustrate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Use Supply and Demand graphs to illustrate the labor market and also the
housing market in a given location. For each problem below provide a brief
explanation and illustrate using a graph.
a. Firms in this location experience a productivity shock that increases their
productivity. How does this impact the labor market in this location? Are
equilibrium wages higher or lower than they were before the productivity
shock? Will the labor market in the location be hiring more or less workers
than before the productivity improvement?
b. How will the changes in the labor market impact the demand for housing in
your location? Use your graph to illustrate.
c. What will happen to price and the quantity of housing units if housing supply
is very elastic in your location? Use a housing market graph to illustrate.
d. What will happen to price and quantity of housing units if housing supply is
very inelastic? Use a housing market graph to illustrate.
e. Very briefly, how might housing policy need to differ in these two locations to
accommodate the increase in population caused by the productivity
improvement?
f. If instead of a productivity increase, your community experiences an increase
in amenities. How will that change impact your labor market and your
housing market? How are the comparative statics in the labor and housing
markets the same or different from the case of a productivity increase?
J

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What would be the likely consequences for local employment if a large multinational corporation were to close its manufacturing plant in a small town? A. Local employment rates would increase due to the emergence of new businesses. B. Local employment rates would likely decrease due to the loss of jobs and associated spending. C. The closure would have no significant impact on local employment rates. D. The closure would increase the diversity of job opportunities in the small town.
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uestion 3 How will an increase in labor productivity affect equilibrium in the labor market? O The demand for labor will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labor will decrease. O The demand for jobs will increase and the equilibrium wage and quantity of labor will increase. O The supply of labor will increase and the equilibrium wage and quantity of labor will increase. O The demand for labor will increase and the equilibrium wage and quantity of labor will increase.