1) To encourage local production and employment, the government provides employment subsidies to firms. For every...

 

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1) To encourage local production and employment, the government provides employment subsidies to firms. For every working hour employed in a firm, the government provides $5 dollars in subsidies. a. [2 points) Use a graph to show the original labour market equilibrium and the new labour market equilibrium. How will the equilibrium wage and employment level change? b. (2 points) Who gets the benefit of this government surplus? Label it clearly in your graph. c. (2 points) What are the changes in worker surplus and firm surplus? Is there deadweight loss in this world? Label your graph clearly with a brief description to earn full credit. d. (2 points) Under what conditions will the government NOT be able to increase the level of employment? Show a special case in a graph, and clearly state who gets the benefit of government subsidies. 1) To encourage local production and employment, the government provides employment subsidies to firms. For every working hour employed in a firm, the government provides $5 dollars in subsidies. a. [2 points) Use a graph to show the original labour market equilibrium and the new labour market equilibrium. How will the equilibrium wage and employment level change? b. (2 points) Who gets the benefit of this government surplus? Label it clearly in your graph. c. (2 points) What are the changes in worker surplus and firm surplus? Is there deadweight loss in this world? Label your graph clearly with a brief description to earn full credit. d. (2 points) Under what conditions will the government NOT be able to increase the level of employment? Show a special case in a graph, and clearly state who gets the benefit of government subsidies.

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a To illustrate the effects of the governments employment subsidies on the labor market equilibrium ... View the full answer