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Here is my question: In lecture we talked about a simple supply demand model for an occupation: ad = a M 15,5 = [3 +
Here is my question:
In lecture we talked about a simple supply demand model for an occupation: ad = a M 15,5 = [3 + yvir, where 11\" represents the demand of labor for the occupation, n5 the supply of labor to the same occupation, w represents wages paid to works in the occupation (relative to other occupations). 6 represents the demand elasticity and y the supply elasticity for the occupation and at and [3 represent demand and supply shifters measured as the percent change in the demand for and supply of labor in the occupation conditional on the given wage (i.e. conditional on vi; = 0). We made the claim that if at = O, . a]? . B n=an w=. 6+}! d 6+)! (1) Show these expressions are valid. (2) Derive general expressions for 1': and W. (Le. expressions that allow both d: at 0 and B i 0). (3) Comment on how 12 and 6 affect how equilibrium employment and wages respond to demand shiftsStep by Step Solution
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