3. This question is about worker-employee matching. a) Explain and represent graphically why if there is only one employer and one employee than a binary choice between either a short work week with a low wage and a long one with a high wage cannot lead to a Pareto efficient equilibrium? b) What needs to happen to the setup of the bargaining between the employer and the worker for a Pareto efficient equilibrium to emerge? c) Explain why a binary choice between either a short work week with a low wage and a long one with a high wage can lead to Pareto efficient equilibria, as long as there are at least 2 workers and 2 employers, with each of the employers looking for exactly one worker. Will there are always be Pareto efficient equilibria in this case?

3. This question is about worker-employee matching. a) Explain and represent graphically why if there is only one employer and one employee than a binary choice between either a short work week with a low wage and a long one with a high wage cannot lead to a Pareto efficient equilibrium? b) What needs to happen to the setup of the bargaining between the employer and the worker for a Pareto efficient equilibrium to emerge? c) Explain why a binary choice between either a short work week with a low wage and a long one with a high wage can lead to Pareto efficient equilibria, as long as there are at least 2 workers and 2 employers, with each of the employers looking for exactly one worker. Will there are always be Pareto efficient equilibria in this case?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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