Consider the labor market in British Columbia. If W(wage rate) is the price of l
ID: 1199039 • Letter: C
Question
Consider the labor market in British Columbia. If W(wage rate) is the price of labor (dollars per hour) and L is the quantity of labor (measured in hours worked.) Suppose that the demand and supply curves for labor are given by: D: W=15-L S: W=5+L
1)What is the equilibrium W and L?
2)What is the total surplus?
15 /12.5/ 30/ 20/ 25
3) What is the point price elasticity of demand at equilibrium?
-5/ -1/ -0.5/ -2/ -15
Now suppose the government of British Columbia decided to have a "price support program" with a wage set at W=$12 per hour and promises to buy any excess supply of labor services.
What is the new quantity of labor traded on the market?
15/ 12/ 5/ 4/ 3
Given the minimum wage of 12$, what is the quantity of labor services the government would be buying?
3/ 4/ 2/ 1/5
Given this price support program (minimum wage of $12), what is the new consumer surplus?
4.5/ 5.5/ 6.5/ 7.5/ 8.5
Given this price support program (minimum wage of 12$), what is the new producer surplus?
12/ 24/ /25/ 30/24.5
Given this price support program (minimum wage of 12$), what is the cost to the government?
50/ 48/ 58/ 60/ 65
Given this price support program (minimum wage of 12$), what is the deadweight loss?
44/ 24/ 34/ 54/ 14
Suppose, instead, the government decides to have a 'government subsidy program' with a guaranteed(or target) wage of W= $12. What is the total cost to the government?
28/ 38/ 18/ 10/ 58
Explanation / Answer
Consider the labor market in British Columbia. If W(wage rate) is the price of l