Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services aredescribed by these equations:Lm = 1308–21WaL, = 1215–22W,where Lis labor (in number of workers), W is the wage (in pesos), and the subscripts denote the sector. The economy has 501workers who are willing and able to work in either sector.Round answers to two places after the decimal when necessary.In addition, workers have a reservation wage of 48.02 pesos that is, rather than taking a job at a wage below 48.02 pesos,they would rather wait for a 52.02 peso union job to open up.e. Calculate the wage and employment in each sector. What is the economy's unemployment rate?Wage in the manufacturing sector:workersWage in the service sector:pesosEmployment in the manufacturing sector:workersEmployment in the service sectorworkersUnemployment Rate:

Given labor equations: Lm = 1308 – 21Wm Ls = 1215 – 22Ws Total workers are 501 therefore Lm + Ls =…

Answered: Consider an economy with two sectors:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider Special City that manufactures light fixtures that are sold around the world. Draw their base case Labor Market graph. Now assume there is a national shortage of glass that Special City manufacturers use to create their light fixtures. Show what would be the effect on your Labor Market graph. Lastly, assume the manufacturers change their manufacturing process to use less glass but inadvertently create a very noticeable increase in the smog levels that makes it hard to breathe. Show another variation to reflect the change in your labor market graph, be sure to indicate the effects of the changes on for each of these market changes or combine the graphs, just be sure the changes and new equilibria are legible:
Consider a two-sector economy that employs a total of 105 units of a single input, labor. Ny of these units are allocated to sector 1, where the wage is 90 for the top five workers in that sector and zero for all others. (Both the wage for the top workers and the number who receive that wage are invariant to changes in Ng) The remaining N2= 105 - Ngunits of labor serve in sector 2, where every worker receives a wage of 10. All workers in sector 1 have an equal probability of being among the top five workers, 6/Ng. and all workers are risk neutral. Instructions: Round your answers to the nearest whole number. a. How many workers will work in sector 1? N1 = b. What will be the value of GNP for the economy? GNP = c. How would your answers differ if there were a 50% tax on the earnings of workers in sector 1? Workers in sector 1: GNP:
do fast .
Calculate the labor and capital share of output: Y=ALαK1-α A= 1.5 α= 0.5 L=Labor K= Capital Factor Markets: Labor Supply (L^S)= 100 Labor Demand (L^D)= 200-5(W/P) Supply of Capital (K^S) = 100 Demand for Capital (K^D)= 200-4(R/P) (W/P)= real wage rate (R/P)= real rental rate
Sketch a production function relating output to labour input. Now imagine that the amount of capital per person increases, thanks to the government borrowing to invest in more capital. Use dotted lines on the same diagram to show the impact on (i) total output and (ii) the average product of labour. Explain your answer. Imagine that the demographic response to a higher standard of living is strongly positive. Using a different colour of line on the same diagram, show how this demographic response to higher incomes would go on to affect incomes in the future. The population is aware that the government borrowing required to finance this capital investment will need to be paid back via tax rises, so they respond by reducing their spending. Using a “Keynesian cross” framework and sketch diagram, model this response as a fall in autonomous consumption, c0.
Suppose labor demand increases in one region relative to another equalized region, discuss how the mobility of labor (migration) affects the predicted response of the nominal and real wage rates in both regions to the relative shift in labor demand (a graph is not needed here). Be sure to discuss the spatial equilibrium result.
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Graphically show the Circular Flow of Income and Goods (Closed Economics. Add in Government Sector) as presented in the virtual/remote lecture. Include all three markets: Labor, Product, Capital and the Government sector.Indicate the flow between the markets and sector--directions of flow and proper labels.
Full answer to question a and b
2. Suppose the table represents the production function of both Mexico and Spain. Use the following information to answer the next question. K = Capital (trillions) Y = Output (trillions) Country L = Population (millions) Mexico Spain 105 45 0.18 0.74 1.0 1.7 0
Consider a simple demand-and-supply model of a competitive labour market in a small town. The demand and supply curves for labour are given by Demand: w= 22 - 3LD Supply: w=4+3LS where w is the wage ($ per hour) and L is the number of hours of employment (measured in thousands of hours per month). a. Use the line drawing tool to plot the demand and supply curves in the graph at the right. Use points with labour hours value of 0 and 5 to draw the lines. Label the lines properly. Carefully follow the instructions above, and only draw the required objects. C Wage ($ per hour) 24- 22- 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 0- 0 Labour Market 2 3 4 1 Labour (thousands of hours per month) + 5

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