0910SEM1-EC3361 - EC3361 NATIONAL UNIVERSITY OF SINGAPOREJ...

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Unformatted text preview: EC3361 NATIONAL UNIVERSITY OF SINGAPOREJ EC3361 LABOUR ECONOMICS I SEMESTER I: AY2009-2010 FINAL EXAMINATION December 2009 Time Allowed: 2 Hours INSTRUCTIONS TO CANDIDATE 1. This examination paper comprises three (3) printed pages, including this page. 2. This examination comprises four (4) questions. 3. Please answer ALL questions. 4. This is an OPEN book examination. 5. The total mark for this exam is 55 marks. l. 2. 3. 2 EC3361 Short answers. (15 marks) a. Explain the fact that workers of the same ability earn more in the automobile industry than in the retail industry. (5 marks) b. Describe the relationship between the public transportation system and labour force participation rate. (5 marks) c. Describe the relationship between family income and the rate of return to education. {5 marks) True or false. (Please justify your answers. 15 marks) a. An increase in the tax rate on labour income will reduce the aggregate labour supply. (5 marks) b. A generous social welfare system will attract more high skilled immigrants. (5 marks) c. An increase in universal minimum wage always reduces employment. (5 marks) (15 marks) There are two types of workers (R and S) and two firms (F and M) in the economy. Type R worker's preference can be represented by ' U R = 30lnw — x , and type S worker’s preference can be expressed as US = 30lnw—2x, where w is the wage rate and x is the risk level of the job. Firm F’s isoprofit curve can be described as :rF =14 -- w + x and fim1 M’s isoprofit curve can be described as 75M = 2— w + 21:. All firms make zero profits in the equilibrium, which implies that the relationship between wage and risk level is w—2 . x=w—14infirmFandx= mfirmM a. Find the optimal wage and risk level in these two firms if M only hires type R workers and F only hires type S workers. (5 marks) b. Find the optimal wage and risk level in these two firms if M only hires type S workers and F only hires type R workers. (5 marks) c. Based on the results from parts (a) and (b), find the equilibrium wage and risk level in these two firms if each of them only hires one type of workers. (5 marks) 3 EC3361 4. [10 marks] Goldenmining Co. is the only employer in Goldland, who facesea labour supply function L, = 50 + w and a demand function for its output Q = 2000 — 2P . Suppose each worker can produce 1 unit of output. a. Find the equilibrium wage and employment level in Goldland. (6 marks) b. Find the employment level if the Goldland government set the minimum wage at 400. (1 mark) 0. Explain the employment effect of the minimum wage. (1 mark) (51. Find the value of minimum wage that maximizes the employment level in Goldland. (2 marks) — END OF PAPER — 1.33....‘1: J ...
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This note was uploaded on 02/01/2012 for the course ECON 101 taught by Professor Meonk during the Spring '11 term at Abu Dhabi University.

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0910SEM1-EC3361 - EC3361 NATIONAL UNIVERSITY OF SINGAPOREJ...

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