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Unformatted text preview: Econ 100A - Worksheet #5 Equilibrium: Normative Analysis Simple Exercises Exercise 1 1) Suppose labour demand becomes more elastic. What effect does this have, in your opinion, on the amount of unemployment that results from instating a minimum wage above the equilibrium price. 2) Consider two thieves who just robbed a bank and need to split the result of their deeds. The total amount of money they need to split is 500 thousand dollars. Consider the following possible ways of splitting this sum (here ( x 1 ,x 2 ) gives the sum that is given to thief 1 and 2 respectively, in thousands of dollars): A = (200 , 200) , B = (250 , 250) , C = (500 , 0) , D = (240 , 260) , E = (100 , 200) . Which allocations are Pareto-Optimal and which ones aren’t? Exercise 2 (Producer Surplus) On the market for wild salmon, the threshold prices and the corresponding number of fishers is given by the following table: Fisher Category A B C D E F G Threshold Price 2 5 7 10 13 18 20 Number of Fishers 1 3 10 25...
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