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Quiz 1 Examples - Tip Sheet for Problem Set 1 ECO 2013 Fall...

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Tip Sheet for Problem Set 1 ECO 2013 Fall 2010 There are a few questions on unemployment, which were covered in class. I may have used the numbers for July 2010 incorrectly. They should be: UR = U/(E+U) = 14.6/(139.0+14.6) = 14.6/153.6 = 0.095 = 9.5% The quiz has 15 or so questions that review demand and supply. Examples follow. Example 1: N is the number of workers and W is the wage. The labor demand curve is given by N = 1500 – 25W. What is the number of workers demanded if the wage is $22? N = 1500 – 25 x 22 = 1500 – 550 = 950 workers. Example 2: The labor demand curve is given by W = $200 – 0.2N. What is the number of workers demanded if the wage is $22? Either just plug in 22 for W and solve for N, or change the equation to 5W = $1000 – N N = $1000 – 5W = 1000 – 5 x 22 = 1000 – 110 = 890. Example 3: The demand and supply curves for good A are given by Q D = 1800 – 2P Q S = -200 + 3P What are the equilibrium price and quantity? In equilibrium, Q D = Q S = Q. From that 1800 – 2P = - 200 + 3P 2000 = 5P P = 400 Substituting into the supply equation, Q = - 200 + 3 x 400 = 1000.
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