Bài tập về Kinh tế vĩ mô bằng tiếng Anh - Chương 9

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Bài tập về Kinh tế vĩ mô bằng tiếng Anh - Chương 9 Chapter 9: The Analysis of Competitive Markets CHAPTER 9 THE ANALYSIS OF COMPETITIVE MARKETS EXERCISES1. In 1996, the U.S. Congress raised the minimum wage from $4.25 per hour to $5.15 perhour. Some people suggested that a government subsidy could help employers finance thehigher wage. This exercise examines the economics of a minimum wage and wage Ssubsidies. Suppose the supply of low-skilled labor is given by LS = 10 w , where L is thequantity of low-skilled labor (in millions of persons employed each year) and w is the wagerate (in dollars per hour). The demand for labor is given by LD = 80 - 10 w .a. What will the free market wage rate and employment level be? Suppose the government sets a minimum wage of $5 per hour. How many people would then be employed? In a free-market equilibrium, LS = LD. Solving yields w = $4 and LS = LD = 40. If the minimum wage is $5, then LS = 50 and LD = 30. The number of people employed will be given by the labor demand, so employers will hire 30 million workers. W LS 8 5 4 LD L 30 40 50 80 Figure 9.1.a 117 Chapter 9: The Analysis of Competitive Marketsb. Suppose that instead of a minimum wage, the government pays a subsidy of $1 per hour for each employee. What will the total level of employment be now? What will the equilibrium wage rate be? Let w denote the wage received by the employee. Then the employer receiving the $1 subsidy per worker hour only pays w-1 for each worker hour. As shown in Figure 9.1.b, the labor demand curve shifts to: LD = 80 - 10 (w-1) = 90 - 10w, where w represents the wage received by the employee. The new equilibrium will be given by the intersection of the old supply curve with the new demand curve, and therefore, 90-10W** = 10W**, or w** = $4.5 per hour and L** = 10(4.5) = 45 million persons employed. The real cost to the employer is $3.5 per hour. W s L = 10w 9 wage and employment 8 after subsidy 4.5 (subsidy) D 4 L = 90-10w D L = 80-10w 40 45 80 90 L Figure 9.1.b2. Suppose the market for widgets can be described by the following equations: Demand: P = 10 - Q Supply: P = Q - 4where P is the price in dollars per unit and Q is the quantity in thousands of units.a. What is the equilibrium price and quantity? To find the equilibrium price and quantity, equate supply and demand and solve for QEQ: 10 - Q = Q - 4, or QEQ = 7. Substitute QEQ into either the demand equation or the supply equation to obtain PEQ. PEQ = 10 - 7 = 3, or PEQ = 7 - 4 = 3.b. Suppose the government imposes a tax of $1 per unit to reduce widget consumption and raise government revenues. What will the new equilibrium quantity be? What price will the buyer pay? What amount per unit will the seller receive? 118 Chapter 9: The Analysis of Competitive Markets With the imposition of a $1.00 tax per unit, the demand curve for widgets shifts inward. At each price, the consumer wishes to buy less. Algebraically, the new demand function is: ...