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Econ 315 Homeworks David Shapiro Fall 2012 Homework Assignment 1A Each of the five questions is worth 20 points; point values for subquestions are...

i need all the questions answered with some explanation but mainly the correct answers are a huge help
Econ 315 David Shapiro Homeworks Fall 2012 Homework Assignment 1A Each of the five questions is worth 20 points; point values for subquestions are shown below. 1. In October, 2012, seasonally adjusted estimated civilian employment was 143,384,000, while unemployment was 12,258,000 and those out of the labor force numbered 88,341,000. The following month, in November, 2012, the estimated employment was 143,262,000, unemployment amounted to 12,029,000, and there were 88,883,000 individuals aged 16 and over who were out of the labor force. Please calculate (to one decimal place): a. (5) The labor force participation rate (LFPR) for each month. b. (5) The employment-to-population ratio (EPR) for each month. c. (5) The national unemployment rate (UR) for each month. d. (5) I argued that the unemployment rate is normally taken as a good inverse indicator of the state of the economy. Is the change in the unemployment rate from October to November an indication of an improving economy? Explain why or why not. 2. Following is a table showing the short-run production function for a competitive firm whose output sells for $2 per unit. L Q 0 0 1 14 2 26 3 36 4 44 5 50 6 54 7 56 8 56 a. (8) Using these data, calculate and graph the demand curve for labor of this firm. b. (6) Suppose that the equilibrium wage rate for workers the firm employs is $8. How many workers will the firm employ? Show demand and supply to the firm and the equilibrium number of workers on a graph. c. (6) Now consider a firm with the same production function, with output price=$2 when 14 units of output are produced, but operating under conditions of imperfect competition in the product market. Explain how and why this firm’s demand curve for labor will compare to that of the firm operating in a competitive product market (described in parts a and b), and the consequences for the firm’s employment of labor. You do not need to draw a graph or do any calculations here. 3. Suppose that there is an increase in the cost of a unit of labor (i.e., a wage increase). In the long run: a. (7) What will be the substitution effect of this change on use of capital and labor, and why? How would this substitution effect be shown on an isoquant diagram? 1
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Econ 315 David Shapiro Homeworks Fall 2012 b. (7) What will be the scale effect of this change on use of capital and labor, and why? How would this scale effect be shown on an isoquant diagram? Note: For parts a and b, you are not required to draw the isoquant diagrams, but simply to explain how the substitution and scale effects would be shown on the diagrams. c. (6) What will be the net or total effect of this decline in the cost of capital on the use of capital and labor? 4. The following table gives the demand and supply for cashiers in retail stores in a particular market. No. of cashiers No. of cashiers Wage rate ($) demanded supplied 3 200 70 4 180 100 5 170 120 6 150 150 7 130 160 8 110 175 9 80 190 a. (5) Plot the supply and demand curves. b. (5) What are the equilibrium wage and employment levels in this market? c. (5) Suppose the number of cashiers demanded increases by 30 at every wage rate. Plot the new demand curve and identify the new equilibrium wage and equilibrium level of employment. d. (5) Now suppose that in addition to the increase in demand from part c, there was also a payroll tax imposed on employers. How would imposition of this tax change your answers to part c? 5. Identify and briefly explain each of the Hicks-Marshall laws of derived demand (5 points each). 2
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