econ151a_ps6_winter2010

econ151a_ps6_winter2010 - Problem Set 6 Economics 151A,...

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

View Full Document Right Arrow Icon

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

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

Unformatted text preview: Problem Set 6 Economics 151A, Winter 2010 Due 2/23/10, 12:10 pm 1. A competitive labor market is summarized by the following labor supply and labor demand curves. E is the number of employee hours (in thousands) and W is their hourly wage. ED = 100 4W ES = 20 + W a. Find the equilibrium level of employment and wages in the labor market. b. Suppose firms are now required to provide every employee with a bottle of sparkling water for each hour they work, at a cost of $1 per bottle. If employees value the sparkling water at its full cost, show (graphically and with algebra) that this does not change the total compensation paid or received, or the total number of worker hours hired. c. Now, find the equilibrium wage, total compensation paid and received, and total worker hours hired if employees value the sparkling water at only $0.25 per bottle. d. Calculate the deadweight loss from the mandated benefit of sparkling water under the assumption in part c that the water is worth only $0.25 per bottle to the workers. in part c that the water is worth only $0....
View Full Document

This note was uploaded on 02/14/2011 for the course ECON 151A taught by Professor Miller during the Spring '06 term at UC Davis.

Page1 / 2

econ151a_ps6_winter2010 - Problem Set 6 Economics 151A,...

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