Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that there are only 2 industries: cars and machinery. Assume that there are 500 workers. Labor demand in the car industry can be described

Assume that there are only 2 industries: cars and machinery. Assume that there are 500 workers. Labor demand in the car industry can be described as L=500-w and labor demand in the machinery industry can be defined by L=400-w. Assume labor is perfectly mobile between industries, but the single other factor, capital, is not mobile between industries (fixed). Assume that there is no unemployment.

a) In this problem, the equilibrium wage is ________.

b) and the number of equilibrium workers is _______.

c) The total returns to capital in the machinery industry is ________.

d) In this problem, if the demand in the machinery industry increases to L = 500 - w, the CHANGE in labor employment in the machinery industry is _________.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Leading Strategic Change In An Era Of Healthcare Transformation

Authors: Jim Austin ,Judith Bentkover ,Laurence Chait

1st Edition

3319808826, 978-3319808826

Students also viewed these Economics questions

Question

Describe Hobbess position on epistemology.

Answered: 1 week ago