Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described by these equations: Lm = 1308–21Wm L, = 1215–22w, where L is labor (in number of workers), W is the wage (in pesos), and the subscripts denote the sector. The economy has 501 workers who are willing and able to work in either sector. Round answers to two places after the decimal when necessary. Suppose a union establishes itself in manufacturing and pushes the manufacturing wage to 52.02 pesos.
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c) Employment in manufacturing sector
d) Employment and wage in service sector
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- Use the accompanying tables for Neon and Zeon to answer the questions that follow. Assume that the wage rate shown equals hourly output and income, and that the accumulated output and income are the sum of the marginal revenue products (MRPs) of each worker. a. Which country has the greater stock of capital and technological prowess? How can you tell? b. Suppose the equilibrium wage rate is $19 in Neon and $7 in Zeon. What is the domestic output (= domestic income) in the two countries? c. Assuming zero migration costs and initial wage rates of $19 in Neon and $7 in Zeon, how many workers will move to Neon? Why will not more than that number of workers move to Neon? d. After the move of workers, what will the equilibrium wage rate be in each country? What will the domestic output be after the migration? What is the amount of the combined gain in domestic output produced by the migration? Which country will gain output; which will lose output? How will the income of native-born workers…In a country called Uncle Sam Land (USL), the labor demand curve is given by: W = K - 4L Where W is the wage rate, K is a variable determined by accumulated capital stock in the country, and L is the labor force in the country. K = 500 is supplied by the capitalists in USL. Next to USL, is Aunt Lewis Land (ALL). ALL is poor and has a Dual Economy. A large numbers of workers in the agricultural sector there are not productive - they are disguised unemployed. They are looking for jobs. Wage in ALL is institutionally fixed at W = 10. Although USL had built a strong impenetrable border wall to prevent ALL migrants from moving in, a firm in USL, called "Coyote International," was able to fly over the impenetrable wall in a helicopter and bring job seekers from ALL who wanted to migrate to USL. As a result of this, USL labor force increases to 110 (L = 110 now). All workers work no matter what the wage is. What is the new national income in USL after migration takes place? O 6242 45000…Total labor income equals the real wage times the amount of labor hired: W x L = WI. Labor's share of income is thus divided by output Y: WL P Y = WL PY Suppose that labor's share of total income is approximately constant over time, as Figure 3-5 in the text shows has been true of the U.S. If labor's share of income is approximately constant, the real wage systematically diverges from labor productivity. is inversely related to labor productivity. O closely tracks labor productivity. is unrelated to labor productivity.
- Consider a country in which there are two sectors, called Sector a and Sector b. The production function of the two sectors are: Y₁ = (La)ª, and Y₁ = (L₁)¤ with 0 ≤ a ≤ 1 and with La as the number of workers employed in sector a and L, as the number of workers employed in sector 6. The total number of workers in the economy is: The only difference between the sectors is that in sector a workers are paid their marginal dy, whereas in sector 6, workers are paid their average product product Y₂ dLa La Workers can move freely between the sectors and they do so until wages are equal. In this case, the value of La is: La O La Labor misallocation and efficiency 1 = 1+a¹/(a) La 1-a = 1+a¹/(a−1) a 1+a¹/(a−-1) ● La = 1+al/(a-1) α 1+a¹/(a) = = 1 = La + Lb Save AnswerThe United States is increasingly outsourcing jobs to India: having the work done in India rather than in the United States. For example, the Indian firm Tata Consultancy Services, which provides information technology services, increased its work force by 70,000 workers in 2010 and expected to add 60,000 more in 2011 (“Outsourcing Firm Hiring 60,000 Workers in India,” San Francisco Chronicle, June 16, 2011). As a result of increased outsourcing, wages of some groups of Indian skilled workers have in-creased substantially over the years. Use a supply-and- demand diagram to explain this outcome.Use the accompanying table for Neon and Zeon to answer the questions that follow. Assume that the wage rate shown equals hourly output and income and that the accumulated output and income are the sum of the marginal revenue products (MRPs) of each worker. a. Which country has the greater stock of capital and technological prowess? How can you tell?b. Suppose the equilibrium wage rate is $19 in Neon and $7 in Zeon. What is the domestic output (= domestic income) in the two countries?c. Assuming zero migration costs and initial wage rates of $19 in Neon and $7 in Zeon, how many workers will move to Neon? Why will not more than that number of workers move to Neon?d. After the move of workers, what will the equilibrium wage rate be in each country? What will the domestic output be after the migration? What is the amount of the combined gain in domestic output produced by the migration? Which country will gain output; which will lose output? How will the income of native-born workers be…
- Consider a two-sector economy that employs a total of 105 units of a single input, labor. Ny of these units are allocated to sector 1, where the wage is 90 for the top five workers in that sector and zero for all others. (Both the wage for the top workers and the number who receive that wage are invariant to changes in Ng) The remaining N2= 105 - Ngunits of labor serve in sector 2, where every worker receives a wage of 10. All workers in sector 1 have an equal probability of being among the top five workers, 6/Ng. and all workers are risk neutral. Instructions: Round your answers to the nearest whole number. a. How many workers will work in sector 1? N1 = b. What will be the value of GNP for the economy? GNP = c. How would your answers differ if there were a 50% tax on the earnings of workers in sector 1? Workers in sector 1: GNP:Consider a state, its economy is largely based on two sectors, e.g. manufacturing and services. Most of local labor forces are employed in either automobile manufacturers or traditional service industries (catering, education, retail and state employees). At state level, total employment is 1.6 million (or 1600 thousand). Demand functions for labor force in manufacturing (M) and service (S) are given as following. Demand for labor in manufacturing (thousand), with wage as Wm ($/week). M = 4000 – 3 * Wm. Demand for labor in service (thousand), with wage as Ws ($/week). S = 2000 – 2 * Ws. As above, total employed labor is 1,600 (thousand), so we have M + S = 1600 (thousand). Then finish the following questions. (1) If labor forces are free to move between manufacturing and service sectors, what relationship is between wages in manufacture and service sectors, Wm and Ws (higher, lower or the same)? And why? (2) Following the condition in…b) Suppose that some of the immigrants set up businesses rather than become employees. Explain how you expect this to affect the wage-setting curve, the price-setting curve and the labour market equilibrium.
- Q1). Suppose the labor market is initially at its equilibrium, i.e., the labor supplied equals the labor demanded. Now suppose IBM develops a new computer chip that makes computer incredibly faster. Explain and show graphically how the arrival of a new, more productive technology affects the labor market. Draw the full graph and provide a detailed explanation of the effect. Label the axes/curves, explain why either the aggregate labor demand curve or the aggregate labor supply curve shifts and describe the economic mechanism that moves the economy from the old to the new equilibrium.Consider Special City that manufactures light fixtures that are sold around the world. Draw their base case Labor Market graph. Now assume there is a national shortage of glass that Special City manufacturers use to create their light fixtures. Show what would be the effect on your Labor Market graph. Lastly, assume the manufacturers change their manufacturing process to use less glass but inadvertently create a very noticeable increase in the smog levels that makes it hard to breathe. Show another variation to reflect the change in your labor market graph, be sure to indicate the effects of the changes on for each of these market changes or combine the graphs, just be sure the changes and new equilibria are legible:Suppose in a particular labor market, the demand for labor is given by the equation LD = 180 – 3W and that the labor supply in this market for native-born citizens is given by LN = 3W, while the supply curve of immigrants in this market is given by LI = 2W, where L represents the number of workers, W is the wage expressed in real terms. Finally, suppose the production function can be represented by ?=100√L a. Assuming immigration is entirely prohibited, what are the equilibrium wage and employment level in this market? b. What would be the equilibrium wage and employment level in this market if immigration were completed legalized? c. How many jobs do natives lose as a result of this immigration? How much aggregate income is lost? d. Assuming the costs of capital in this market are zero, find the total profits to firms before and after immigration. What is the change in total profits? e. Compute the total output of this market before and after immigration. How much total output does…