laborexam1f03

laborexam1f03 - Midterm 1 This test is a mixture of short-...

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Economics 421 Fall 2003 Lich-Tyler Midterm 1 This test is a mixture of short- and long-answer questions. Answer them in the space provided. The short answer questions are worth 4 points apiece and can be answered with a phrase, equation, or (at most) a couple of sentences. The long answer questions are worth 20 points apiece and should be answered in a page. If you must use more space, clearly indicate that the answer is continued onto the back side of the page. Pace yourself carefully, and good luck. Short answer questions (30 minutes) 1. Suppose there are 90 million people in the population. Of these, 54 million are currently employed and 18 million are unemployed. Calculate the labor force participation rate and the unemployment rate . 2. What is the optimality condition for an individual worker’s choice of leisure and consumption (i.e., “where BLANK equals BLANK”) for an interior solution? 3. List the two types of fixed costs of working, and explain how each affects the hours worked (and why). 4. Each week, Otto works 45 hours out of a maximum of 110 waking hours, and receives $10 for each hour that he works. He also receives $50 weekly from a family trust. What is his full income ?
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laborexam1f03 - Midterm 1 This test is a mixture of short-...

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