mid2s04am - (iii) Suppose now that a consortium of...

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AECO370(am) Mid-term 2 Spring 2004 Instructions: Answer 2 of the following 3 questions. Provide diagrams and explain your answers. (1) How does a &rm determine its optimal level of employment in the short- curve for labor. Suppose a new trade agreement with Argentina means (2) Suppose the market for nurses in the Capital Region is summarized as follows: Supply: w = 450 + 0 : 05 E Demand: w = 600 & 0 : 1 E where w is the weekly wage in dollars and E is the number of nurses. (i) What are the competitive equilibrium wage, w and employment level, E : (ii) What are the elasticity of demand and the elasticity of supply at the equilibrium values?
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Unformatted text preview: (iii) Suppose now that a consortium of hospitals becomes the only employer of nurses in the capital region ( i.e. all the demand for nurses comes from a single employer). Would the nurses be better or worse o/ than in the competitive equilibrium? (I do not need the exact number but explain your answer.) 1 (3) Suppose employers prefer high-school graduates to drop-outs. Explain with a diagram and in words how an increase in the minimum wage can cause the graduates to crowd-out ( i.e. displace) the drop-outs in employment. How do you think this result &ts in with the original intension of the minimum wage legislation? What might be the long-term implications for the high school graduation rate? 2...
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mid2s04am - (iii) Suppose now that a consortium of...

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