ASSIGNMENT -
Please demonstrate your understanding of labor economics by answering the questions. Be sure to show every step of your work and state what you are doing for each step. Assignments can be handed in during class time or to the drop box in the department.
1.) Who are the actors or players in a labor market? After defining each actor or player and briefly describing the role that they play in a "positive" way, please explain how you would weight their relative importance in a more "normative" way, taking into account where your personal beliefs are on the political spectrum (i.e. whether you lean more "left" or more "right"). One way to do this is to start by assigning a relative percentage to each of their roles in the labor market. This answer should be written in the form of an essay (i.e. in paragraphs) and limited to two one-sided pages. It will be graded on its completeness and its originality (and not its length).
2.) Dolph, Jimbo, and Kearney are the only individuals participating in the very particular labor market for ‘protective' services. Dolph's labor supply is given by HHDD = -46 + 0.87424.ww, where HH is the hours worked per week and ww is the hourly wage rate. Jimbo and Kearney's labor supply functions are represented by HHJJ = -35 + 1.42842 .ww and HHKK = -39 + 1.32464 .ww, respectively.
a.) First, determine the reservation wage for each of these individuals, showing every step of your work. Please round to the second decimal point.
b.) Second, if the market wage is $37, how many hours does each individual supply? And, at which wage rate would each individual supply 40 hours per week? Please round to the second decimal point.
c.) Third, provide the market labor supply equation. Note that this is more difficult than it may initially seem, as the proper conditions need to be fully stated.
d.) Lastly, in a separate figure, graph the market labor supply curve, labeling everything you can. [Another quadrant may be used as needed for the intercept.]