DEPARTMENT OF ECONOMICS STELLA MARIS POLYTECHNIC UNIVERSITY Econ 418 (Labor Economics) Mid Term Examination November 11, 2021 INSTRUCTION (S): The exam consists of five questions. You are required to Answer Any four questions in NO particular order. Write only your ID number, course title and section on your answer booklet. (25 Points Each). 1. What is labor Economics? (b). With an aid of appropriate graphs, briefly discuss change in labor and change in quantity demanded indicating the factors responsible for each.(c) Explain the following concepts with respect to labor economics: Wages, Earning, Total Compensation, and income. 2. Policymakers are faced with the tradeoff between equity and efficiency, concisely differentiate between them and discuss the types of equity. (b) Briefly explain three 3 ways in which the labor market differs from other markets. 3. Given production as a function of labor employment: Q = 50L - 0.5LZ Workers are paid a daily, wage of $120 and the price of the product is $ 40. (a) Find the MPL b) Determine the optimal employment c) what would the demand for Labor be? (b). Briefly explain any three 3 factors responsible for failure in the labor market. 4. There are many possible reasons why the competitive model of supply and demand is not appropriate for analyzing real -world labor markets, discuss any three (3) sources of imperfections in the labor market. (b). Briefly discuss why most firms will prefer using internal recruitment for hiring labor. 5. How does the labor market differ from other markets? (b).In the context of labor demand, discuss the scale and substitution effects. (c). With examples, differentiate the followings: primary & secondary labor markets and local and national labor markets