Chapter 12, Problem 1FRQ

a)

To determine

The question requires us to determine the size of the labor force.

Answer to Problem 1FRQ

The size of the labor force is 6 million.

Explanation of Solution

Given,

  $\begin{array}{c}\text{Unemployment = 1 million}\\ \text{Employment = 5 million}\\ \text{Labor force = 1 million + 5 million }\\ \text{= 6 million}\end{array}$

Therefore, the size of the labor force is 6 million.

Economics Concept Introduction

The labor force is the sum of the employed and unemployed population in a workforce.

The people are considered employed who are already working and getting some compensation for their working hours, while the people are considered unemployed who are not working now, but actively looking for a job.

  $\text{Labor force = Employed people + Unemployed people}$

b)

To determine

The question requires us to determine the labor force participation rate.

Answer to Problem 1FRQ

The labor force participation rate is 50%.

Explanation of Solution

Given,

Population age 16 and older = 12 million

Labor force = 6 million

Insert these values:

  $\begin{array}{c}\text{Labor}\text{force}\text{participation}\text{rate = }\frac{\text{Labor}\text{force}}{\text{Population}\text{age}\text{16}\text{and}\text{older}}\text{×100}\\ =\frac{6}{12}\times 100\\ =50\end{array}$

The labor force participation rate is 50%.

Economics Concept Introduction

The following expression represents the formula for the labor force participation rate:

  $\text{Labor}\text{force}\text{participation}\text{rate=}\frac{\text{Labor}\text{force}}{\text{Population}\text{age}\text{16}\text{and}\text{older}}\text{×100}$

c)

To determine

The question requires us to determine the unemployment rate.

Answer to Problem 1FRQ

Thus, the unemployment rate is 16.66 percent.

Explanation of Solution

Given,

Unemployment = 1 million

Labor force = 6 million

Insert these values in the unemployment rate formula:

  $\begin{array}{c}\text{Unemployment}\text{rate = }\frac{\text{Number}\text{of}\text{unemployed}\text{people}}{\text{Labor}\text{force}}\text{×100}\\ =\frac{1}{6}\times 100\\ =16.66\end{array}$

Thus, the unemployment rate is 16.66 percent.

Economics Concept Introduction

People are considered unemployed if they are not working currently but actively looking for a job.

The unemployment rate is the ratio of the number of unemployed people to the labor force in an economy.

  $\text{Unemployment}\text{rate = }\frac{\text{Number}\text{of}\text{unemployed}\text{people}}{\text{Labor}\text{force}}\text{×100}$

Where the labor force is the sum of employed and unemployed people in an economy.