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Economics
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22 Oct 2020

If a person chooses not to work at the prevailing wage rate, then what type of unemployment would it be called?

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Types of unemployment
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Vaishali Yadav
Vaishali YadavLv10
22 Oct 2020

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Suppose that demand for a good is given by Q = 122 - 3P, while supply for the good is given by Q = 1P - 20. The average person values their time at $12.29/hour. If a price ceiling of $11.04 is imposed, how many hours will the average person have to wait in line?

2- Suppose that demand for a good is given by Q = 132 - 3P, while supply for the good is given by Q = 2P - 5. If a price ceiling of $11.96 is imposed, what will be the area of the deadweight loss?

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The unemployment rate is the percentage of workers who are seeking a job at the prevailing wage, but who are unable to get one. When a minimum wage is imposed, it creates some unemployment among minimum wage workers.

Suppose that the demand for labor is given by Q = 56 - 1W, where 'W' is the hourly wage rate, and the supply of labor is given by Q = 5W - 5. Imagine that a minimum wage of $22.68/hour is imposed by law.

What will be the unemployment rate for workers in this market?

Suppose that two people are playing a guessing game with a prize going to the person closest to one-half of the average. Guesses are required to be between 0 and 100 (could be integers or decimals). Show that none of the following is Nash equilibria:

(a) Both choose 1. (Hint: consider a deviation to 0 by one person, so that the average is 1/2, and half of the average is 1/4.

(b) One person chooses 1 and the other chooses 0.

(c) One person chooses x and the other chooses y, where x > y > 0. (Hint: If they choose these decisions, what is the average, what is the target, and is the target less than the midpoint of the range of guesses between x and y? Then use these calculations to figure out which person would win, and whether the other person would have an incentive to deviate.)

Frankie and Johnny can both earn a wage rate of $10 per hour and, coincidentally, both have $100 per week in non-labor income. Assume that both have T = 100 hours per week to allocate to leisure and work. Frankie chooses to work 40 hours per week. Johnny, on the other hand, chooses not to work at all! Use indifference curve analysis to account for why two individuals confronting the same wage rate and with the same amount of non-labor income make such different labor supply choices.

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