Question TwoUsing a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.Suppose that the adult population is 210million, and there are 130 million who are employed and 5 million who are unemployed. Calculate the unemployment rate and the labor force participation rate.Define unemployment and explain factors that determine the rate of unemployment given that labor market is in the steady state. Why is the short-run demand curve for labor downward sloping? Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product?

In question 2, it is given that adult population is 210 million and 130 million people are employed…

Answered: Suppose that the adult population is…

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 Two

Using a diagram explain what happens to the long-run demand curve for labor if the price of labour increases? Decompose the changes into scale and substitution effects.
Suppose that the adult population is 210million, and there are 130 million who are employed and 5 million who are unemployed. Calculate the unemployment rate and the labor force participation rate.
Define unemployment and explain factors that determine the rate of unemployment given that labor market is in the steady state.
Why is the short-run demand curve for labor downward sloping? Why does a profit-maximizing firm hire workers up to the point where the wage equals the value of marginal product?

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