6. micro - Maya Cohen 066370065 Exercise # 6: Question 1:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Maya Cohen 066370065 Exercise # 6: Question 1: a. The demand and supply go down. The wages fall for the workers- and the employers are letting people go, in order to get back into their marginal utility. If the supply curve was inelastic, than the change in their wages was exactly 10%. Therefore the change in their wages depends on their willingness to stay after the deduction in the wages, Also we should notice that the change is going to be moderate, meaning if you earn more then your tax would be higher (10%). The more you get the more you pay. b. Wages are only a part of the of production cost. Any change in workers wages would be bigger than the change in total costs. In addition after the change we moderate the loss by selling less quantity- causing a decrease in percentage cost. c. It depends on the elasticity of demand for workers. the more elastic demand is the employers would bear the cost since more workers would quit due to a decrease in their salary. And if demand was more inelastic then the workers would bear most of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/25/2009 for the course BUSINESS 772 taught by Professor Sadeh during the Spring '07 term at Interdisciplinary Center Herzliya.

Page1 / 2

6. micro - Maya Cohen 066370065 Exercise # 6: Question 1:...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online