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PS1.docx - Economics 27 Professor Patricia M Anderson...

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Economics 27 Professor Patricia M. Anderson Practice Problem Set 1 Basics and Labor Demand Multiple Choice Questions 1. One way families are cut back in the face of higher unemployment is by going out to dinner less frequently. Consider a competitive market for restaurant cooks. Given such a change in family eating patterns, we would predict that a) the supply of cooks would shift in b) the number of cooks employed would fall c) wages for cooks would increase d) all of the above 2. A regression estimates that Q = 35 - 0. 1*X, where Q is the quit rate in percentage points, and X is the number of employees at the firm. Both t-statistics are greater than two, and the firm sizes range from 40 to 100. This indicates that doubling the number of employees from 45 to 90 will 3. When the government imposes a payroll tax on workers
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