C1. Suppose the labour market is a perfectly competitive market and it can be described by...
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C1. Suppose the labour market is a perfectly competitive market and it can be described by the following equations: Labour demand (firms): DÃ ⇒ N = 200 - 10W Labour supply (workers): SN ⇒ N = 10W where W is the wage that each worker earns W if he/she is employed and N is number of workers. Show your step-by-step calculation or a zero will be assigned, and your explanation must follow lecture discussion. (a) (b) (c) (d) (e) Determine the equilibrium wage W* and employment level N*. Suppose the government imposes a payroll tax T = 3 on firms for every worker they employ. Determine the new equilibrium employment level N', the wage that workers take home W', and the tax burdens on workers and firms. Suppose the labour supply changes to Ŝµ ⇒ N = −100+20W. Prove this new labour supply curve also passes through the equilibrium W* and N* in part (a). Repeat the payroll tax in part (b) using this new labour supply curve to determine the new equilibrium employment level Ñ', the wage that workers take home Ŵ', and the new tax burdens on workers and firms. Plot all the results from part (a) to part (c) in a properly labeled (especially the vertical intercept of every curve) graph. Compare the tax burdens on workers and firms between part (b) and part (c). What is the economic intuition for the differences? C1. Suppose the labour market is a perfectly competitive market and it can be described by the following equations: Labour demand (firms): DÃ ⇒ N = 200 - 10W Labour supply (workers): SN ⇒ N = 10W where W is the wage that each worker earns W if he/she is employed and N is number of workers. Show your step-by-step calculation or a zero will be assigned, and your explanation must follow lecture discussion. (a) (b) (c) (d) (e) Determine the equilibrium wage W* and employment level N*. Suppose the government imposes a payroll tax T = 3 on firms for every worker they employ. Determine the new equilibrium employment level N', the wage that workers take home W', and the tax burdens on workers and firms. Suppose the labour supply changes to Ŝµ ⇒ N = −100+20W. Prove this new labour supply curve also passes through the equilibrium W* and N* in part (a). Repeat the payroll tax in part (b) using this new labour supply curve to determine the new equilibrium employment level Ñ', the wage that workers take home Ŵ', and the new tax burdens on workers and firms. Plot all the results from part (a) to part (c) in a properly labeled (especially the vertical intercept of every curve) graph. Compare the tax burdens on workers and firms between part (b) and part (c). What is the economic intuition for the differences?
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Related Book For
Numerical Methods for Engineers
ISBN: 9780071244299
5th Edition
Authors: Steven C. Chapra, Raymond P. Canale
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