Question 5

Consider a low-wage labor market. Workers in this market are not presently covered by the minimum wage, but the government is considering implementing such legislation. If implemented, this law would require employers in the market to pay workers a $5 hourly wage. Suppose all workers in the market are equally productive, the current market clearing wage rate is $4 per hour, and that at this market clearing wage there are 600 employed workers. Further suppose that under the minimum wage legislation, only 500 workers would be employed and 300 workers would be unemployed. Finally, assume that the market demand and supply schedules are linear and that the market reservation wage, the lowest wage at which any worker in the market would be willing to work, is $1. Compute the dollar value of the impact of the policy on employers, workers, and society as a whole.

 

Question 6

The following questions all concern information asymmetry:

a. Use a diagram to illustrate the deadweight loss that, in the absence of government intervention, results from information asymmetry.

b. Briefly describe a government policy that can partially or entirely eliminate the deadweight loss resulting from information asymmetry.

c. Should all information asymmetry problems be eliminated through government intervention? If not, on what types of information asymmetry should the government focus? Briefly explain?

 

Question 7

Under what circumstances can all the welfare effects of a government intervention (e.g., imposition of an excise tax) be fully measured in the primary markets that are directly affected by the intervention? Explain. Under what circumstances is it also necessary to measure the effects of the intervention in secondary markets that are indirectly affected by the intervention? Explain.

 

Question 8

Imagine that a government project purchases such a large amount of an input that is sold in a competitive market that the price of the input increases. Discuss whether the project's budgetary expenditure on the input is likely to be an appropriate measure of the social cost of the purchase or shadow pricing is likely to be necessary. 

 

Question 9

Describe, in writing or via a diagram, the options that a CBA Analyst has to predict impacts (for a CBA) in the event that demand and supply curves are not readily available. HINT – at the highest level, the CBA Analyst has three options and each of those options in turn involves various actions/options.

 

 

You can do these 5 first, I am trying to figure out the last one. If I am unable to figure out that one I will post it and pay you by tips. Thank you :)

SuperTutor

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Status NEW Posted 12 Jul 2017 12:07 AM My Price 12.00

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