ECON-2006EG Study Guide - Quiz Guide: Market Clearing, Demand Curve, Marginal Product

11 views5 pages

ceruleanraccoon367

7 Mar 2021

School

Laurentian

Department

Economics / Science Èconomique

Course

ECON-2006EG

Professor

Byron Eastman

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Chapter 23: we use the demand and supply model to study the labor market, firms on the demand side, household on the supply side (labor) Labor demand: how do firms determine whether to hire another worker: diminishing marginal product (=downwards sloping) Labor supply: how do workers respond to higher wages: we expect an upward-sloping supply curve, vertical supply curve: when everyone works (beyond this point the labor supply curve is completely inelastic, there is no one that can works) Labor supply curve shifts: tastes or preferences (women started working outside of home - shift to the right, opportunity cost of time , population and demographics (more people - right shift) Market clearing wage: where supply and demand are equal. What if we cannot go down to the market clearing wage. > what are the consequences for the labor supply curve: i will move to point e2, involuntary unemployment (the market wage is above the market clearing wage)

Related Questions

Determine the effect on either the aggregate demand curve (is it a rightward or a leftward shift?), the aggregate short-term supply curve, and the long-term aggregate supply curve (does the upward sloping portions of the SAS curve shift left or right, or does the vertical portion of the LAS curve shift to the right or the left?). Also determine the effect on the price level, the real output level, and employment/unemployment. Explain and express this graphically using the AS/AD macro model.

In late 2004, oil prices increased sharply while the rate of growth in labor productivity declined. The combination of these two factors should shift the short-run aggregate supply curve up (left). The increase in oil prices, when combined with the slowdown in productivity growth, will likely result in higher costs for firms at each output level. To offset these higher costs, firms increase their prices at each output level, causing the short-run aggregate supply curve to shift up (left).

crimsonturtle166

a. An increase in the price of Post Frosted Mini Wheats (a substitute for Kellogg Frosted Mini Wheats) should

shift the Demand curve for Kellogg Frosted Mini Wheats to the right.
shift the Demand curve for Post Frosted Mini Wheats to the left.
cause the Demand curve for Pepsi to shift to the right.
cause no shift in the Demand curve for Kellogg Frosted Mini Wheats.
cause the Demand curve for Kellogg Frosted Mini Wheats to shift to the left.

b. Assuming Demand is downward sloping and Supply is upward sloping (as we usually do), what happens to equilibrium price and quantity of a good when Supply decreases?

P decreases; Q decreases

P increases; Q decreases

P decreases; Q increases

P and Q should not change

P increases; Q increases

c. Suppose frictional unemployment is typically UF = 3.0% and structural unemployment is typically US = 2.0%, then what is the "natural" rate of unemployment, UN?

none of the other options

Please review the following work and correct me if I have mixed up the concepts of movements and shifts of supply and demand curves. Feel free to copy and edit/correct my mistakes. I'll be waiting. Thanks in advance!!

Changes in price dictate movements along demand curves. When a decrease in demand or the quality demanded occurs it's a safe bet that it's correlated to a price increase, which in turn leads to a resultant surplus of that particular commodity in the marketplace. This is because decreased demand means less of that commodity being sold. On the other hand, a price decrease usually leads to an increase in the demand for a particular commodity, or an increase in sales, which in turn leads to a shortage of that commodity in the marketplace.

To shift the demand curve itself, changes need to occur in other aspects of the market beyond simply a change in the price of a commodity. For example, an increase in income means the consumers have more disposable income. With more disposable income, demand for commodities will increase, and results in a shift of the demand curve itself. In this example, the demand curve would shift right. On the opposite side of the coin, cost increases due to production or losses in efficiency may decrease the side of supply, shifting the demand curve to the left.

Analogous to shifts in the demand curve, shifts along a supply curve occur when prices change as well. When the cost to produce a commodity increases, supply drops, and the supply curve shifts to the left. If the cost of production drops, and supply increases, the supply curve shifts to the right as demand develops.

Pharmaceutical supply and demand is an easy way to understand these concepts.

Drug demand increases: Price decreases, supplies decrease.

Drug demand decreases: Price increases, supplies increase.

Drug supply increases: Production costs drop, demand drops.

Drug supply decreases: Production costs increase, demand increases.

"But where and how do movements and shifts occur in the above?"

purpleworm770

ECON-2006EG Study Guide - Quiz Guide: Market Clearing, Demand Curve, Marginal Product

Document Summary

Get access

Related Documents

ECON-2006EG Study Guide - Quiz Guide: Demand Curve, Capacity Utilization, Market Clearing

ECON-2006EG Study Guide - Quiz Guide: The Trough, Business Cycle, Longrun

ECON-2006EG Study Guide - Quiz Guide: Marginal Cost, Opportunity Cost, Profit Maximization

Related Questions