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- Problem 1 1.1 Explain what is meant in economics by "reservation wage". 1.2 Discuss what you think will happen to the reservation wage if: 1.2.1 Unemployment Benefits increase 1.2.2 Health insurance is tied to holding a job 1.2.3 A more infectious and deadly COVID-19 variant is discovered 1.3 Do firms always pay wages that are equal to their workers' reservation wages? Why or why not?"Discuss the Changes made to the United States Unemployment Insurance System during the COVID-19 Pandemic"A company called Tramlaw has become the only employer in the local market for retail labor. The marginal value (extra profit before wages) of hiring an additional worker-hour is ?? = 60 − ?, where ?? is marginal value and ? is the hours of labor worked. The supply of workers is given as ? = ? 2 , where ? is the wage (the price of labor). Assume Tramlaw pays all retail workers in this market the same wage. For parts (a) and (b), ignore the numbers and equations (though you could use the equations as hints). a. Explain in words why Tramlaw’s marginal cost of hiring an additional worker-hour is higher than supply, which represents the marginal cost to the worker of providing an additional hour of labor. b. Draw a market diagram of Tramlaw’s local labor monopsony, including marginal value (MV), supply (S), and marginal cost (MC). Graphically indicate the monopsonist’s profit-maximizing quantity of labor ??, wage ??, the efficient quantity of labor ? ∗ , and any deadweight loss (DWL)…
- the employee has worked. A typical case Luba works on commission and has a weekly pay period. One week, she was paid $150.00 in commission and worked 25 hours. The minimum wage applicable to Luba is $14.25 an hour. The minimum wage ($14.25) multiplied by the number of hours worked in the pay period (25) is $356.25. Luba is owed the difference between her commission pay ($150) and the required minimum wage ($356.25). Calculate: Luba's employer owes her $MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Use the figure below to answer the following questions. Wage rate (dollars per hour) 16 A) Qp = 15 - 3Qm B) Qp = 20 - 4Qm C) Qp = 10 - 6Qm D) Qp = 20 - 6Qm E) Qp = 15-9Qm 12 8 4 0 20 40 S 60 80 Labour (millions of hours) Figure 1 1) Refer to Figure 1. Initially the market is in equilibrium. If the minimum wage is set at $12 per hour in this market, what is the amount of deadweight loss of the society in millions of dollars? A) 20 B) 80 C) 100 D) 0 E) 40 2) The initial budget equation for pop (p) and movies (m) is Qp = 15 - 6Qm, the price of pop is $2, and 2) the price of a movie is $12. If the price of a movie increases to $18, what is the new budget equation? 1) 3) For a particular perfectly competitive firm STC=100+20g + q+q², SMC=20+2q, where and qis output. If the market price is equal to 40, at what level of output should the firm operate to maximize profit in the short run? A)…(Harder) Can you come up with gross profit levels I and II such that for the unobservable effort case the principal will implement e=1 (that is will offer the optimal wage schedule for e=1) if there is no limited liability, but will implement e=0 when there is limited liability. For the values of gross profit levels you calculate, which effort level is socially optimal (which effort level would be implemented when effort is observable). Based on your answer, is it possible to have lower social surplus/welfare because of asymmetric information?
- What do you think is the impact of ChatGPT on the economy and job prospects, and how could it potentially change the job market? How do economists view the use of generative AI models such as ChatGPT in terms of increasing shared prosperity and reducing income inequality?Nittany Knitting makes athletic jerseys in Happy Valley, PA. There are two kinds of workers in the valley, skilled (who produce three jerseys per day) and unskilled (who produce one). Given its location, Nittany can hire as many unskilled workers as it wants at the going wage of 15 per day. If it wants to hire X1 skilled workers, it must pay w1 = 19+X1 to each of them. Nittany wants to produce 60 jerseys per day. How much will they cost?rdcdn.com/blackboard.learn.xythos.prod/5a25b62cdb9cf/5497575?X-Blackboard-Expiration=1631804400000&X-Bla 2/ 4 100% Directions: Write below whether each factor will increase or decrease demand for the market listed, what determinant of demand caused the increase and decrease and show the demand curve shift on the graph. Determinant and Change Increase or Decrease: Graph Scenario 9. Market: Paper towels this month Scenario: Prices of paper towels are expected to rise in the future. TRIBE: 10. Market: Cheese this month Increase or Decrease: P. Scenario: Prices are expected to fall next TRIBE: month. 11. Market: Pancake market Increase or Decrease: Scenario: Prices of syrup increase. D Q TRIBE: 12. Market: Ketchup market Increase or Decrease: Scenario: Prices of hot dogs decrease TRIBE: D 13. Market: Almond milk Increase or Decrease: P Scenario: Price of dairy milk inereases TRIBE: 14. Market: Almond butter Increase or Decrease: Scenario: Price of peanut butter decreases TRIBE: 15. Market:…
- Suppose a single parent can work up to 16 hours per day at a wage rate of $30 per hour and has no non-labour income. An income maintenance program has been developed to assure a minimum level of income for low-income families. A simplified version of this type of a program is one that would give this single parent a $120 no-work grant accompanied by a benefit reduction of a dollar for every dollar earned until no benefit is left to pay. For example, to someone who does not work the program pays $120, while for someone who works 1 hour and earns $30 the benefit is reduced by $30 to $90. Draw the daily budget constraints with and without program participation for the single individual described above on the plane that has leisure L on the horizontal axis, and money income Y (inclusive of benefits if on a program) on the vertical axis. Carefully mark all the important points of the constraints and indicate the slopes. Question: At what level of labour market earningsdoes the subsidy end?…1) Consider observable effort. Assume that if the Agent does not accept the wage the Principal offers his outside option gives him a net utility of v =2. The probability of high profit under e=1 is %, the probability of high profit under low effort is 1/4. Calculate the minimum wage that the agent will accept to work and supply the asked effort when the Principal asks him to supply e=0, and e=1. Let us call these wages wo and wi. Now, assume that instead of offering him a flat wage, the Principal is offering the agent a wage schedule (, w) where the agent receives when the (gross) profit is High and w when the (gross) profit is low. Calculate all the lowest cost wage schedules the agent will accept to supply e=1, and e=D0. Does the principal's expected net profit change when he pays the minimum cost wage schedule instead of the flat wage minimum cost wage? Explain the intuition for your answer.> Figure 1 $ of consumption per year 30000 28000 26000 24000 22000 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 Warren 333 0 0 200 400 600 sample indifference curves Refer to Figure 1 What is Warren's wage per hour? 1166 800 1000 1200 1400 1600 1800 2000 2200 Hours of leisure per year Suppose all workers have 2000 hours to spend in work or leisure. Figure 1 displays sample indifference curves and a budget constraint corresponding to no income redistribution program for Warren.