Consider the labour market for farms during the harvest season. Assume the market is perfectly competitive, with a labour demand function QD = 10-P and a labour supply function QS = 3P, where P is the wage. a) What are the consumer (farm owners) surplus and producer (farm workers) surplus in equilibrium? b) What is the price elasticity of demand at the equilibrium? c) Suppose the government subsides the farm owners (consumers) $1 for every unit of labour purchased. Then, compute the quantity of labour traded in the market, the wage received by the workers and the wage paid by the farm owners.
Consider the labour market for farms during the harvest season. Assume the market is perfectly competitive, with a labour demand function QD = 10-P and a labour supply function QS = 3P, where P is the wage. a) What are the consumer (farm owners) surplus and producer (farm workers) surplus in equilibrium? b) What is the price elasticity of demand at the equilibrium? c) Suppose the government subsides the farm owners (consumers) $1 for every unit of labour purchased. Then, compute the quantity of labour traded in the market, the wage received by the workers and the wage paid by the farm owners.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
ChapterP3: Market Structure
Section: Chapter Questions
Problem 9KC
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Consider the labour market for farms during the harvest season. Assume the market is
a) What are the consumer (farm owners) surplus and producer (farm workers) surplus in equilibrium?
b) What is the price
c) Suppose the government subsides the farm owners (consumers) $1 for every unit of labour purchased. Then, compute the quantity of labour traded in the market, the wage received by the workers and the wage paid by the farm owners.
d) Calculate the
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