tan economy. In the initial (prehurricane) equil metropolitan area is 500,000 workers and the elasticity of supply of labor is 4.0 and the pric is -1.0. Suppose the hurricane reduces labor supply curve) by 100,000 workers. a. Use a supply-demand graph of the urban lal the hurricane. b. The equilibrium wage [increases, decreases. computed as.... c. The equilibrium employment [increases, c (to. workers), computed as.... d. The reduction in the equilibrium employm

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(6, Katrina Decreases Labor Supply
Consider the effects of a natural disaster like hurricane Katrina on a metropoli-
tan economy. In the initial (prehurricane) equilibrium, total employment in the
metropolitan area is 500,000 workers and the daily wage is $100. The price
elasticity of supply of labor is 4.0 and the price elasticity of demand for labor
is -1.0. Suppose the hurricane reduces labor supply (a horizontal shift of the
supply curve) by 100,000 workers.
a. Use a supply-demand graph of the urban labor market to show the effects of
the hurricane.
b. The equilibrium wage [increases, decreases] by
percent (to $.
computed as....
c. The equilibrium employment [increases, decreases] by
workers), computed as....
(to
d. The reduction in the equilibrium employment is [greater, less] than the ini
tial decrease in labor supply because.
...
percent
Transcribed Image Text:(6, Katrina Decreases Labor Supply Consider the effects of a natural disaster like hurricane Katrina on a metropoli- tan economy. In the initial (prehurricane) equilibrium, total employment in the metropolitan area is 500,000 workers and the daily wage is $100. The price elasticity of supply of labor is 4.0 and the price elasticity of demand for labor is -1.0. Suppose the hurricane reduces labor supply (a horizontal shift of the supply curve) by 100,000 workers. a. Use a supply-demand graph of the urban labor market to show the effects of the hurricane. b. The equilibrium wage [increases, decreases] by percent (to $. computed as.... c. The equilibrium employment [increases, decreases] by workers), computed as.... (to d. The reduction in the equilibrium employment is [greater, less] than the ini tial decrease in labor supply because. ... percent
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