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1. Suppose that the demand for dental hygienists is LD =5,000 - 20W, where L=the number of dental hygienists and W = the daily wage.
1. Suppose that the demand for dental hygienists is LD =5,000 - 20W, where L=the number of dental hygienists and W = the daily wage. What is the own-wage elasticity of demand for dental hygienists when W = $100 per day? Is the demand curve elastic or inelastic at this point? What is the own-wage elasticity of demand when W = $200 per day? Is the demand curve elastic or inelastic at this point? 3. Suppose that the demand for burger flippers at fast-food restaurants in a small city is LD = 300 - 20W, where L = the number of burger flippers and W = the wage in dollars per hour. The equilibrium wage is $4 per hour, but the government puts in place a minimum wage of $5 per hour. a. How does the minimum wage affect employment in these fast-food restaurants? Draw a graph to show what has happened, and estimate the effects on employment in the fast-food sector. b. Suppose that in the city above, there is an uncovered sector where LS =-100+80W andLD=300 - 20W, before the minimum wage is put in place. Suppose that all the workers who lose their jobs as burger flippers due to the introduction of the minimum wage seek work in the uncovered sector. What happens to wages and employment in that sector? Draw a graph to show what happens, and analyze the effects on both wages and employment in the uncovered sector. When the cost of dough-making machines fell by 10 percent, the demand for assistant bakers fell by 15 percent. What is the cross-wage elasticity of demand for assistant bakers in this case? Are assistant bakers and dough-making machines gross substitutes or gross complements
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