a) Draw a graph with a labor supply curve and a labor demand curve (put employment on the x-axis). Explain why one curve slopes upwards and the other curve slopes downwards.

b) An unusually warm summer increases workers preference for leisure time. Show this change on your supply and demand diagram. What effect will this shock have on employment and wages?

c) Suppose there has been an increase in female labor force participation, just like in the United States. Show how to model this change on a labor supply and demand diagram.What happens to the employment-population ratio and what happens to the wage? Explain.

d) In the data, you notice that average real wages and the employment-population ratio have both risen. Using a labor supply and demand model, how could you explain this fact?