Times are tough in the labor market for new lawyers. In this market there are two types of lawyer, the high-skill kind, and the low-skill kind. The fraction of low-skill lawyers is X, where as usual, X is between O and 1. The high-skill kind will bring in business to a law firm worth 86,760, while the low-skill kind only brings in 55,557 dollars worth of business to a law firm. Unfortunately, it's impossible to tell whether a potential hire is a high-skill or a low-skill worker until it's too late and they have already been hired. Legal firms are, for various arcane reasons, all risk-neutral. Fortunately, the legal association has introduced a new certification exam, and they will let potential lawyers take this exam for the low, low price of 7,879. How tremendously generous of them. High-skill workers can easily pass this exam without too much effort, but low-skill workers will have to take an additional preparation course, which will cost them 43,221. What is the highest X can be before we have only the separating equilibrium for these lawyers?

Times are tough in the labor market for new lawyers. In this market there are two types of lawyer, the high-skill kind, and the low-skill kind. The fraction of low-skill lawyers is X, where as usual, X is between O and 1. The high-skill kind will bring in business to a law firm worth 86,760, while the low-skill kind only brings in 55,557 dollars worth of business to a law firm. Unfortunately, it's impossible to tell whether a potential hire is a high-skill or a low-skill worker until it's too late and they have already been hired. Legal firms are, for various arcane reasons, all risk-neutral. Fortunately, the legal association has introduced a new certification exam, and they will let potential lawyers take this exam for the low, low price of 7,879. How tremendously generous of them. High-skill workers can easily pass this exam without too much effort, but low-skill workers will have to take an additional preparation course, which will cost them 43,221. What is the highest X can be before we have only the separating equilibrium for these lawyers?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Immigration and Labor Market Equilibrium Consider two distinct labor markets in two provinces, Gaziantep and Trabzon. Initially, the “native” wage ?? is the same in both provinces, with equilibrium occurring at the intersection of labor supply and demand curves in each of the provinces. Suppose that Gaziantep receives an influx of Syrian immigrants. Assume that immigrants and natives are “perfect substitutes” in production. Immigration between the two provinces is not allowed, but it is costless for the firms to move between Gaziantep and Trabzon. Describe the new equilibrium in the labor market for natives in each of the provinces using labor supply and demand curves. Explain your reasoning. THE ANSWER SHOULD BE VERY CLEAR AND DETAİLED, THANK YOU!!!
(c) Let us now turn to the labor market for grocery store workers in Little town. Recently one of the last two grocery stores in Little town closed leaving only one employer for grocery store workers in this area. This labor market is not very competitive. What type of market structure is this? (d) Draw a typical supply curve (i.e. average expenditure), marginal expenditure, and demand for the grocery store in Little Town. Label the equilibrium wage and number of grocery store workers. (e) Suppose that some time has passed and the population has grown in Little Town and there are now many grocery stores. Now suppose that the grocery store workers unionize. Draw a graph to depict the equilibrium wage and number of workers in this new market.
Four (TYPE I) firms sell Product X in competitive markets at a price of 10. They each operate with the production function: x = 100L – L². Another firm with monopoly power (TYPE II) sells faces demand curve P = 160 – Y and has production function Y = 5L. All five firms hire as wage-takers in the same market where labour supply is w = 2L. Illustrate and quantify the equilibrium wage and the number of workers hired by each firm. а. Solve for the equilibrium wage and employment by each firm. b. Provide a 3-panel diagram. 6.
The local community contains many residents with PhDs who would like to teach as adjunct professors at the local university, which is the main employer of people with PhDs. The university’s demand curve or marginal value curve for adjunct professors is written: W = 12,000 – 15Q, where W refers to the employer’s willingness to pay for an adjunct professor to teach one course. Because the university faces the entire market supply curve for adjunct professors, the supply curve is upward sloping as hiring each additional adjunct requires offering a higher wage for all who are hired. The assumption that everyone is paid the same salary as required by the marginal worker leads to the university’s marginal expenditures rising faster than the supply curve. The average expenditure curve (or supply curve) for teachers is written as: W = 4,200 + 25Q. But assuming that hiring an additional teacher involves increasing the wage for all of the teachers hired, the marginal expenditures for…
1) Employer discrimination implies that A) if the group discriminated against is small, there will be a wage differential in the market. B) some employers give up profits to avoid hiring one group. C) co-workers and customers prefer one group of workers over another. D) there will be no market wage differential. 2) Percentage goals in minority employment A) will not cause changes in the makeup of a company's workforce. B) can be met more quickly for companies that can maintain low quit rates. C) can always be met quickly if nondiscriminatory hiring is used. D) will take longer to achieve in industries with relatively lower turnover rates. 3) Comparable worth analysis in Minnesota found that A) jobs with higher measured worth received higher pay. B) jobs with higher measured worth received lower pay. C) a regression of measured worth versus pay yielded a horizontal line. D) measured worth of most jobs was completely unrelated to pay. 4) If workers in one group are discriminated against…
A company has 350 employees who work 120 hours a month each. Each worker earns $21 per hour. There is a profitable project the company would like to start, but it would require an additional 21,000 working hours within three months to be completed, and all the employees are fully loaded with other projects. The company does not want to hire new staff; they would like the project to be completed by the current workforce instead.Given that the wage elasticity of labor supply is 0.8, calculate the hourly wage the company should offer its employees to encourage them to work on the new project. Use the midpoint method and round to two decimal places throughout your calculations.
Consider the wage negotiations between Cricket Australia (CA) and the union that represents the players. Assume that Cricket Australia and the union are bargaining over how much of a $200 surplus will be split. Suppose that the union moves first and suggests an offer p. CA may accept or reject the offer. If the offer is accepted the union gets p and the CA gets 200 - p. If the offer is rejected, CA will now make an offer q for which the union may accept or reject. If the offer q is accepted the Union gets q and CA gets 200 - q. If offer q is rejected, both parties get 0. Assume that the possible offers to be made are $1, $100 or $199. What is payoff for the Union in the subgame perfect equilibrium of this bargaining scenario?
The equilibrium wage rate in an industry is determined by a) whether workers or management are better at negotiating. b) finding where the market supply curve indicates that the substitution effect and income effect of a wage increase are offsetting. c) the strength of the substitution effect relative to the elasticity of demand for labor. d) the intersection of the market demand curve for labor and the market supply curve for labor.
Economics 4. Assume men and women are perfect substitutes. Across employers there is a distribution of the discrimination coefficient against women of -0.2 to 0.5. In a graph with female employment on the x-axis and the gender wage ratio on the y-axis answer the following. a. What would be the "y-intercept" of the Demand curve? b. Assume female labor supply is perfectly inelastic. Show on this graph equilibrium where women and men are paid equally. c. A bizarre disease starts leading to more women being born then men. How will this eventually affect the gender wage gap if there are no simultaneous demand shocks?
Some workers are “skilled”. Each of them on average will install 4 packages per day. The rest of the workers are “rookies”, who on average install 1 package per day. Each package creates a value of $100 for the shop owner. The supply curve of skilled workers is QS = W – 100 and the supply curve of the rookie workers is QR = 4(W – 100), where W is the daily wage. The market for workers is perfectly competitive. If employers cannot observe each worker’s ability, how many packages per day will the workforce install in equilibrium? 480 300 240 None of the above
Suppose that the wage of skilled labour equals 30 and the wage of unskilled labour equals 20. The total labour force is 35. In addition, the number of unskilled workers who are employed is twice as large as the number of skilled workers who are employed. The markets for skilled labour and unskilled labour are defined as in the lecture notes. a) finding a job in the skilled sector. Calculate the opportunity cost of skill acquisition as a function of the probability of b) bBriefly describe the nature of the trade-off faced by an unskilled worker. "Calculate the number of employed workers in the skilled sector if unskilled workers are c) paid just enough to forego skill acquisition. Show ALL steps. d) of finding a job in the skilled sector is 80 %. riefly explain why neither of the two labour markets is in equilibrium if the probability
A lawyer has two clients. She charges a yearly retainer plus a separate fee for each consultation. The retainer is a fee each client pays just to secure the services of the lawyer for the following year, and the consultation fee is the price the lawyer charges to do one legal job for the client. The clients' annual demand curves for legal jobs are Client 1: Q, -21-P Client 2: Q₂-17-2P where P is the consultation fee in thousands of dollars for one legal job and Q, is the number of legal jobs done for client/ The lawyer's marginal cost for completing one legal job is 2.6 (also in thousands of dollars). The lawyer wants to determine the fee schedule (retainer and consultation fee) that will maximize her profe. She feels she cannot use a different fee schedule for each client, so she must set one retainer and one consultation fee that apply to both clients. She should charge a consultation fee of $thousand per legal job. (Enter your response rounded to two decimal places) She should…