Part 3 Short Answers ~ 1) (4 Points) Using a graph, show how each of the following labour markets (assumed to be competitive and initially in equilibrium) is affected by the following changes. Show what happens to equilibrium wages and quantity of labour supplied.~ a) (2 points) Labour market for math professors a. Statistics Canada wants to hire mathematicians at 2 times the original wage (assumption: mathematicians and math professors share the same skills)~ b) (2 points) Labour market for accountants a. Government increases accountant education requirements from 4 years to 5 years.~ 2) (12 Points) Alex has 120 hours in the week available to split between work and leisure. Alex earns $10 per hour after taxes. Suppose Alex has a "typical" indifference curve as we've seen in class - convex to the origin. Use a graph to show the following: a) (2 points) Graph Alex's budget line.~ b) (2 points) Now, suppose Alex's wage increase to $15 dollars per hour. Show Alex's budget line.~ c) (4 points) Use a graph to show how Alex's work/leisure decision changes in response to this wage increase when the substitution effect dominates. ~ d) (4 points) Use a graph to show how Alex's work/leisure decision changes in response to this wage increase when the income effect dominates. ~