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ProblemSet1

# ProblemSet1 - ECP 3203 Fall 2010 Problem Set 1 Due...

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ECP 3203 – Fall 2010 Problem Set # 1 Due Wednesday, Sept. 1 (in class) 1. Suppose that the supply curve for bus drivers is L S = 20,000 + 350W and the demand curve for bus drivers is L D = 100,000 – 150W, where L = number of bus drivers and W = the daily wage. a) Plot the demand and supply curves b) What are the equilibrium wage and employment levels in this market? c) Now suppose that at any given wage, 20,000 more workers are willing to work as bus drivers. On a new graph, plot the new supply curve and find the new equilibrium wage and employment level. Why doesn’t employment simply grow by 20,000? 2. Consider the market for factory labor in the home appliance industry. For each of the following situations, describe any changes in the demand or supply in this labor market (ex. demand shifts right, supply shifts left, demand shifts but direction is ambiguous). Then describe the direction of any changes in equilibrium wages or employment (this is easiest to do by drawing a graph for each change).

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ProblemSet1 - ECP 3203 Fall 2010 Problem Set 1 Due...

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