1/2, where Y is output and L
is labour. Labour demand is L
and labour supply is L
31,250(W/P). Initially, there is an equilibrium in which output is 250,000,
employment is 62,500, the nominal wage is 20, and the price level is 10. Demand for
output is 250,000 at the given price, so all output is sold. Suddenly, demand at the
given price drops to 200,000, but the firm does not lower its price. It lowers output
and lays off workers.
A) Assuming that the firm cannot produce for inventory, how much will the firm
want to produce?
B) Assuming output equals the amount given under part a, what employment
force will the firms want to hire?
C) If the firm continues to pay the same nominal and real wage, how much more
labour will workers wish to supply than the firm will want to hire?
This question was asked on Jan 30, 2014 and answered on Jan 30, 2014.
Recently Asked Questions
- Assume that, as the compensation professional, you are to present to managers three employment laws that impact compensation. Explain the laws and identify how
- Suppose we take a deck of 52 cards, and throw away all of the Queens. We take an ace of spades, a two of spades, a three of spades, and a four of spades from a
- In ordinal utility, consumer equilibrium occurs at the point where: MRSxy = Py / Px. (Assume good Y is on the Y axis and good X is on the X