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PROBLEM 1 Unemployment rate = unemployed / labor force

PROBLEM 1 Unemployment rate = unemployed / labor force = (labor force – employed) / labor force = 175.000 – 168.000 / 175.000 = 4% Employment rate = employed / working age population

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PROBLEM 1 Unemployment rate = unemployed / labor force

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  1. PROBLEM 1 Unemployment rate = unemployed / labor force = (labor force – employed) / labor force = 175.000 – 168.000 / 175.000 = 4% Employment rate = employed / working age population = 168.000 / 250.000 = 0.672 67.2% Participation rate = labor force / working age population = 175.000 / 250.000 = 0.7 70.0%

  2. PROBLEM 2

  3. W W' W S E D' D E E' PROBLEM 3a) The creation of internet caused the demand for programmers to increase, i.e. the labor demand schedule has shifted to the right. Both employment and the wage rate have increased for computer programmers.

  4. W S W W’ D D’ E E’ E PROBLEM 3b) The supply of coffee decreases, the price of coffee increases, the demand for coffee decreases, Starbuck reduces its labor demand, the wage decreases

  5. W S W W’ D D’ E E’ E PROBLEM 3c) The demand for cigarettes decreases, the price of cigarettes decreases, the tobacco companies reduce their labor demand: the labor demand schedule shifts to the left, the wage received by the workers decreases

  6. W W' W S E D' D E E' PROBLEM 3d) The demand for new houses increased, construction companies’ labor demand increased, the wage received by the workers increased.

  7. S D D’ PROBLEM 3e) The effect of the repeal of import quotas is an increase of the demand for Japanese cars in Italy, which offsets the demand for Italian cars; as a result from the increased competition, Italian car producers will downsizwe their manpower and the demand schedule for workers in the car industry will shift leftwards, leading to a lower level of both employment and wages. W W W’ E E’ E

  8. W S’ S D D’ E E’ E PROBLEM 3f) Both the supply and demand for computers falls. The demand falls because some consumers will go without a computer for health reasons.  The supply falls because fewer people will be willing to work in the computer industry due to the health risks. The same thing happens in the market for programmers. The demand falls due to the reduced production of computers, and the labor supply falls due to the increased risks that what happens to wages.working with computers involve. Employment falls for sure. The effect on wages is ambiguous.

  9. W S W* W D’ D’’ E E’ E’’ E PROBLEM 4The graph below shows the effects of an above-equilibrium minimum wage: an increased wage at the cost of less employment. Only people that keep their job are better off. If the demand for labor is more elastic (for example, because labor can be easily substituted with capital), more jobs are destroyed.

  10. PROBLEM 5

  11. PROBLEM 5

  12. PROBLEM 6

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