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ASSIGNMENT > MT445_Unit3_Assignment_ Western Wyoming Community College ECON MT445_Unit 3 Assignment: Elasticity and Labor Market Equilibrium. Q&A. Score 100%

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Unit 3 [MT445] Unit 3 Assignment: Elasticity and Labor Market Equilibrium 1. Is the price elasticity of demand for gasoline more elastic over a shorter or a longer period of time? Explain. 2. Is the price elasticity of supply, in general, more elastic over a shorter or a longer period of time? Explain. 3. Why is the supply curve for labor usually upward sloping? Explain. 4. In the graph below, assume that the market demand curve for labor is initially D1. The market supply curve for labor is indicated with figure “S.” Wage rate is depicted on the other things held constant vertical axis (dollars per unit), and employment level (quantity of labor) is depicted along the horizontal axis. Answer the following questions. (Description of graph: In the graph, assume that the market demand curve for labor is initially D1. The market supply curve for labor is indicated with figure “S.” Wage rate is depicted, based on the other things held constant, on the vertical axis (dollars per unit), and employment level (quantity of labor) is depicted along the horizontal axis. The graphs show both scenarios for an increase in demand as well as a decrease in demand in the labor market. If the labor demand increases, the demand curve shifts from D1 to D3. If the labor demand decreases the demand curve shifts from D1 to D2. The change in demand also changes the equilibrium values. Based on this information and scenarios presented under the questions, answer the following questions.) Unit 3 [MT445] D. Grimes a. What are the initial equilibrium wage rate and employment level? b. Other things held constant, assume that the price of a substitute resource decreases. What will happen to the demand for labor? Will it increase or decrease? What are the new equilibrium wage rate and employment level? c. Other things held constant, suppose that demand for the final product increases. Using the labor demand curve D1 as your starting point, what happens to the demand for labor? What are the new equilibrium wage rate and employment level? d. Assume this industry is dominated by non-union workers. How would the equilibrium wage compare to that earned in a similar industry with similarly skilled union workers? Explain. 5. Use the following data to answer the questions below. Assume a perfectly competitive product market. Units of Labor Units of Output 0 0 1 8 2 12 3 17 4 21 5 23 a. Calculate the total revenue product and marginal revenue product at each level of labor input if output sells for $4 per unit. b. If the wage rate is $15 per hour, how many units of labor will be hired? Explain your answer. Unit 3 [MT445] D. Grimes References: O'Brien, G.H.A. P. (2018). Economics. [Purdue University Global Bookshelf]. Retrieved from https://purdueuniversityglobal.vitalsource.com/#/books/9780134739281/ Riley, Geoff/ (2012). Unit 1 Micro: Revision on Price Elasticity of Supply, https://www.tutor2u.net/economics/blog/unit-1-micro-revision-on-price-elasticity-ofsupply#:~:text=Supply%20is%20usually%20more%20price,to%20adjust%20its%20production %20levels.&text=Supply%20is%20likely%20to%20be,such%20as%20land%20and%20capital. 3 of 3

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