ec151a_wntr2010_ps1_solution - plus the unemployed(actively...

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Answer Key Problem Set 1: 1. a. b. P f *F + P C *C = I c. (MU c / MU f ) = (Pc/ P f ) d. Joe: ___________________ Max:----------------- Clothes (C) Food (F) F* C* Clothes (C) Food (F)
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2. a. This means that if the minimum wage increases by one dollar (and all other variable remain constant) the hours worked by teenagers will decrease in 1.3 hours per week. b. Confidence Interval: [-1.3-2*0.44, -1.3+2*0.44] = [-2.18,-0.42]. This is the coefficient estimate (-1.3) plus or minus 2 times the standard error (0.44). c. effect=-1.3*0.75= -0.975 Hours worked by teenagers would decrease in 0.975, or almost 1 hour per week. 3. a. Civilian Labor Force November 2009 = 153877 (in thousands) 153,877,000 The Civilian Labor Force is the quantity of person employed (work on job for at lest 1 hours)
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Unformatted text preview: plus the unemployed (actively looking for work, or on temporary layoff). b. Unemployed November 2009 = 15375 (in thousands), or 15,375,000 c. Unemployment rate = 10% The employment rate plus the unemployment rate will not add to 1 because, in addition to the employed and unemployed, there are individuals who are out of the labor force, and so are not counted in either rate. A further complication here is that the problem mistakenly said that the employment rate ’s denominator is the labor force. The proper denominator is actually the population. So adding the employment rate and the unemployment rate will typically mean adding two rates with different denominators, and they will not sum to 1....
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