Suppose that the total aggregate supply of workers (all sectors combined) is given by S=100 workers (notice this is a constant, so aggregate labour supply is perfectly inelastic - there are 100 workers supplied regardless of the wage). Suppose there are two perfectly competitive industries/sectors with labour demand Da=103-Wa in sector A and labour demand Db=98-Wb in sector B. 1. On separate graphs, labour demand in sector A, labour demand in sector B. 2. Assuming perfect information and mobility, the neoclassical model predicts Wa=Wb. Let w denote this competitive equilibrium wage. If all wages are equal to W. the combined demand for labour across all industries is D=DDa+Db. Graph the total (aggregate) supply curve. On the same graph, graph the combined (aggregate) demand curve. The aggregate demand curve has slope and vertical intercept Aggregate supply and demand are equal when W= 3. Since both sectors have wage Wthere will be workers demanded in sector A and workers demanded in sector B. This answer must be numerical. Enter 1 for "true" and 0 for "false": Workers have a preference which sector they work in Out of the total 100 workers, we predict workers will find a job in sector A. workers will find a job in sector B and workers will be unemployed.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose that the total aggregate supply of workers (all sectors combined) is given by S-100 workers (notice this is a constant, so aggregate labour supply is perfectly inelastic - there are 100 workers supplied regardless of the wage).
Suppose there are two perfectly competitive industries/sectors with labour demand Da=103-Wa in sector A and labour demand Db=98-Wb in sector B.
1. On separate graphs, labour demand in sector A, labour demand in sector B.
2. Assuming perfect information and mobility, the neoclassical model predicts Wa=Wb. Let Wdenote this competitive equilibrium wage. If all wages are equal to W, the combined demand for labour across all industries is D=Da+Db.
Graph the total (aggregate) supply curve. On the same graph, graph the combined (aggregate) demand curve. The aggregate demand curve has slope
and vertical intercept
Aggregate supply and demand are equal when W=
3. Since both sectors have wage Wthere will be
workers demanded in sector A and
workers demanded in sector B. This answer must be numerical. Enter 1 for "true" and O for
"false": Workers have a preference which sector they work in
Out of the total 100 workers, we predict
workers will find a job in sector A,
workers will
find a job in sector B and
workers will be unemployed.
Transcribed Image Text:Suppose that the total aggregate supply of workers (all sectors combined) is given by S-100 workers (notice this is a constant, so aggregate labour supply is perfectly inelastic - there are 100 workers supplied regardless of the wage). Suppose there are two perfectly competitive industries/sectors with labour demand Da=103-Wa in sector A and labour demand Db=98-Wb in sector B. 1. On separate graphs, labour demand in sector A, labour demand in sector B. 2. Assuming perfect information and mobility, the neoclassical model predicts Wa=Wb. Let Wdenote this competitive equilibrium wage. If all wages are equal to W, the combined demand for labour across all industries is D=Da+Db. Graph the total (aggregate) supply curve. On the same graph, graph the combined (aggregate) demand curve. The aggregate demand curve has slope and vertical intercept Aggregate supply and demand are equal when W= 3. Since both sectors have wage Wthere will be workers demanded in sector A and workers demanded in sector B. This answer must be numerical. Enter 1 for "true" and O for "false": Workers have a preference which sector they work in Out of the total 100 workers, we predict workers will find a job in sector A, workers will find a job in sector B and workers will be unemployed.
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