3.7E. Some people advocate government funding of college scholarships as a way of

creating a more egalitarian society. Others argue that scholarships help only those who are able to go to college. answers to the preceding questions shed light on this debate?

6.1: Suppose that students look for part-time jobs. On average it takes 2 weeks to

find a part-time job, and the part-time job lasts on average 12 weeks.

A. Calculate the rate of job finding per week and the rate of job separation per week

B: What is the natural rate of unemployment for this population of students.

Problem 6.3: The residents of a certain dormitory have collected the following data: People

who live in the dorm can be classified as either involved in a relationship or uninvolved.

Among the involved people, 10 percent experience a breakup of their relationship every

month. Among uninvolved people, 5 percent will enter into a relationship every month. What

is the steady-state ("equilibrium") fraction of residents who are uninvolved?

Problem 6.4: Suppose that Congress passes legislation making it more difficult for firms to

fire workers. If this legislation reduces the rate of job separation without affecting the rate of

job finding, how would the natural rate of unemployment change? Do you think that it is

plausible that the legislation would not affect the rate of job finding? Why or why not?

Problem 6.5: Consider an economy with the following Cobb-Douglas production function:

1/ 3 2 / 3 Y K L = . The economy has 1000 units of capital and a labor force of 1000 workers.

A. Derive the equation describing the labor demand in this economy as a function of the

real wage and the capital stock.

B. If the real wage can adjust to equilibrate labor supply and labor demand, what is the real wage? In this equilibrium, what is employment, output, and the total amount earned by workers?

C. Assume that a minimum wage of 1 dollar is imposed by Congress. What happens to employment, output, and the total amount earned by workers.

D. Did the minimum wage help the

working class in this example?

6.6: Suppose that a country experiences a reduction in productivity (A);

A.What happens to the labor demand curve?

B.What is the effect on employment, unemployment and the real wage if we assume perfect competition? Assume that the labor supply curve is vertical.

C.How would this change in productivity affect employment if unions prevent the real wage from falling?r