2) Draw the PF & Labor Market model assuming that initially the country Austria had 200,000 workers in their labor force earning a wage equilibrium of $20.00/hour and producing a level of output close to $2.5 Million. However, after a negative technology shock, the level of productivity per worker greatly decreased, which in turn reduce the labor demand by 50% of the current work force which in turn decrease Real gdp by 40%. As a result of these changes the wage equilibrium in Austria decreased around $14/hour. Graph the two models by showing the changes within each scenario and correctly labeling all curves accordingly.

2) Draw the PF & Labor Market model assuming that initially the country Austria had 200,000 workers in their labor force earning a wage equilibrium of $20.00/hour and producing a level of output close to $2.5 Million. However, after a negative technology shock, the level of productivity per worker greatly decreased, which in turn reduce the labor demand by 50% of the current work force which in turn decrease Real gdp by 40%. As a result of these changes the wage equilibrium in Austria decreased around $14/hour. Graph the two models by showing the changes within each scenario and correctly labeling all curves accordingly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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