Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 5, Problem 5.2P
To determine
The impact of increase in tax.
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In the Canadian labour market, demand for labour can be impacted by elasticity of the product in which labour is an input. What will the elasticity of factor demand be if unit wages rise by 5 percent and the number of employed workers falls by 9 percent?
Multiple Choice
1.67.
0.56
1.80
2.36
3.00
Part B: As a policy analyst for the Congressional Budget Office, you have been asked to estimate the potential costs of occupational licensing to the U.S. economy. Using demand analysis, a basic examination of the national costs of licensing could be developed as follows: Suppose that the entire 10 percent wage premium is from market power (as opposed to greater productivity from enhanced human capital), and further assume that labor supply is perfectly elastic and the labor demand elasticity is 0.5. Hypothetically, assume that the Census data suggests that there are approximately 68 million licensed workers in the U.S. Also assume that the average earning is $50,000. Calculate the potential job loss and the annual cost to consumers as a consequence of occupational licensing.
Hint: Recall that the movement up the demand curve is the change in wages times the labor demand elasticity times the number of workers. To calculate the costs, what would a license worker make if they were…
The after-school tutoring industry is competitive, and so is the labor market for after-school tutors. Suppose male
and female tutors have equal experience and skill. Currently, some tutoring centers are biased and will only hire
male tutors, whereas unbiased tutoring centers desire to hire the cheapest tutors and do not care about their
genders. As a result, the equilibrium wage for male tutors is higher than that of female tutors.
Refer to Scenario 19-6. Long-run competition in the after-school tutoring market is consistent with which of the
following statements, assuming consumers do not discriminate between male and female tutors?
Oa. All firms that hire only male tutors will shut down because they are not able to compete.
O b. Nothing will change; all firms will continue to operate as they do now.
Oc. Tutoring centers only hiring male tutors have lower cost, leading to an increase in the demand for male
tutors.
Od. All firms that hire only female tutors will shut down because they…
Chapter 5 Solutions
Principles of Economics (12th Edition)
Ch. 5 - Prob. 1.1PCh. 5 - Prob. 2.1PCh. 5 - Prob. 2.2PCh. 5 - Using the midpoint formula, calculate elasticity...Ch. 5 - A sporting goods store has estimated the demand...Ch. 5 - For each of the following scenarios, decide...Ch. 5 - For the following statements, decide whether you...Ch. 5 - Taxicab fares in most cities are regulated....Ch. 5 - Studies have fixed the short-run price elasticity...Ch. 5 - Prob. 2.9P
Ch. 5 - Prob. 2.10PCh. 5 - Prob. 2.11PCh. 5 - [Related to the Economics in Practice on p. 99] At...Ch. 5 - Prob. 3.2PCh. 5 - Prob. 4.1PCh. 5 - Prob. 4.2PCh. 5 - The cross-price elasticity values for three sets...Ch. 5 - Prob. 4.4PCh. 5 - World famous Burpee Beer is brewed in the small...Ch. 5 - Prob. 5.2P
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