Macroeconomics (Cloth) (Instructor's)
10th Edition
ISBN: 9781319106003
Author: Mankiw
Publisher: MAC HIGHER
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Chapter 4, Problem 3QQ
To determine
The system of fractional reserve banking.
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2. Elasticity and the Minimum Wage
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The following graph depicts two labor markets for cashiers. We assume the same
supply curve (cashiers respond similarly to wage offers in each city) but different
demand functions (employer demand is more elastic – more responsive to wages -
in one city than the other, perhaps because one has higher quality retail stores
than the other). The y-axis shows hourly wages in dollars; the x-axis shows the
number of employees in hundreds.
Wage
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29
10
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8
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Supply
5
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1
D2
12
D1
0
0
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Employment
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With minimum wage of 8 dollars:
A. What is the equilibrium level of employment before the minimum wage is
imposed?
B. A) According to the graph and given a minimum wage of 8 dollars, how
many workers would employers want to hire if the demand for workers in
City #1 looked like D1? B) How does that number compare to the market
equilibrium employment?
C. A) In City #1 (with demand curve D1), would there be an excess supply of…
The demand function for organic apples is given by Qd = 20 – 2P while the supply function is given by Qs = 4P – 10.a. Solve for the equilibrium P* and Q*.b. Carefully graph the D & S curves. Include all intercepts and P* and Q* (**enlarge your graph so you can better show the questions below use graphing paper**)i. Suppose that the government legislates a $1/gallon to be collected from the buyer. Identify the new equation for the demand curve. Plot the new demand curve (on the same graph as b).ii. Solve for the new equilibrium PT* and QT* and indicate on your graph. On the same graph, indicate the P that consumers pay (PC) and the P that producers get to keep (PS).c. On another graph with the original D and S curves, impose the same tax ($1/gallon) to sellers. Identify the new equation for the supply curve. Plot the new supply curve. i. Solve for the new equilibrium PT* and QT* and indicate on your graph. On thesame graph, indicate the P that consumers pay (PC) and the P that…
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Macroeconomics (Cloth) (Instructor's)
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