Econ 201 Homework: Ch. 4: Labor and Financial Markets

Select the correct type of price control law described and then choose from the multiple choice when it is binding or nonbinding.

"Usury Laws" are laws that set a price maximum in the financial capital markets. --- 'Minimum wage Laws" are laws that set a wage minimum in the labor market. --- When is it a binding ceiling? the equilibrium interest rate is higher than the law permits --- When is it a nonbinding floor? the equilibrium wage rate is above the minimum wage rate

In the market for financial capital,

the supply of financial capital comes from savings, and the demand goes to making loans.

In the graph of the labor market for high‑skill workers, move the appropriate curve or curves to reflect a change in technology that increases worker productivity and is a complement to labor. Then, complete the statement about the results of this change. --- ____ will _____ their _____labor, and the wage will ____

Demand Curve shift up / right --- Firms; increase; demand for; increase

Suppose the accompanying graph depicts the labor market for bullet train conductors. Initially, the market was in equilibrium at the intersection of the demand curve and the initial supply curve, S1. Then, suppose that more people have chosen to train as bullet train conductors which causes the supply curve to shift right to a new location , S2. Suppose that, simultaneously, you observe an increase in the wages of bullet train conductors. On the graph, demonstrate how the labor demand curve must have changed so that conductors' wages increased. Labor Market for ConductorsWagesQuantity of LaborS1S2D If, in general, all high-skilled industries have also performed in a similar way, of the following predictions, which is the most likely to occur?

Demand curve shift right / up --- An increase in income inequality.

The graphs show the market labor supply (LS) curve for the country of Littleland. The two graphs show different shifts in the LS curve, from LS1 to LS2. Assume there is no change in the labor demand curve. For each statement, select the graph that illustrates the appropriate shift.

Graph A: b. The equilibrium wage rate decreases. c. The government introduces a free childcare policy. d. Immigration to Littleland increases. g. The birthrate in Littleland increases. Graph B: a. The equilibrium wage rate increases. e. Emigration from Littleland increases. f. The birthrate in Littleland decreases.

College students often borrow money to attend school. Generally, the plan is to pay loans back through future earnings. In this way, capital and labor markets are intimately connected. Assume that the market for education and college educated labor are perfectly competitive. Use the accompanying graphs to show what happens to the market for education and college educated labor if the government increases the number of very low interest loans. Who gains and who loses from this policy?

Market for College Education: Demand Curve shift Right --- Market for Educated Labor: Supply Curve shift Right --- Gains: * Producer of Schooling * Employers of College graduates Loses: * Consumer of Education (Without loans) * College Graduates

Which is true of the minimum wage in the United States? --- Which has been shown to be true in the United States about changes in the minimum wage rate?

Only about 1% of the United States population receives the minimum wage rate. --- Changes in the minimum wage have historically had a small impact on employment.

The graph of a labor market is shown. Place the endpoints of the minimum wage line to indicate a binding minimum wage in this market.

Point 1 (0, 6) Point 2 (9, 6)

Which of the following is not a reason why negative consequences can result from efforts to control prices?

Prices reflect the amount of profit that producers want to gain for providing goods, services, labor, or financial capital to the market

The labor market for engineers specializing in microchip technology is graphed below. Adjust the graph to depict what happens if the demand for microchips increases. What if, at the same time, the union for microchip engineers implements a policy forcing companies to only hire engineers with a doctorate degree?

Supply curve shift left --- Demand curve shift right

A county's labor market is depicted in the graph below. The government believes that college students are not receiving enough real world experience before graduating. The government decides to pay for the final two years of college for any student who works at least part-time while attending college. Change the graph below to demonstrate the government subsidy's impact on the labor market.

Supply curve shift right / up

Suppose the graph represents the labor market for low-wage workers. A minimum wage of $8 per hour is being considered. If imposed, the minimum wage will result in a

Surplus --- of 200 workers

Various forms of capital are used in the production of final goods and services. However, the term financial capital market refers to

a market where households with savings and firms which demand funds for investment interact.

The graph represents a labor market. a. What is the equilibrium hourly wage? b. What is the equilibrium number of hours worked? c. Identify all the factors that would cause the equilibrium wage to increase.

a. $5 per hour b. 12 hours c. It would increase with: an increase in labor demanded; a decrease in labor supplied.

Suppose the demand and supply schedules shown in the table represent the labor market for carpenters. a. What is the equilibrium number of carpenters who will be hired? b. What is the equilibrium hourly wage for carpenters?

a. 7000 b. $14

Place the answer options in the associated axes of the graph so that it reflects the major components of the financial capital market. There is more than one correct answer for each axis, but not all of the answer options will be used.

x axis: Interest Rate Rate of Return --- y axis Quantity of Money Invested Quantity of Money Borrowed