Question 4 (20 marks) The labour market is described by the following labour demand and supply functions D(t) = 2 + a, W

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Question 4 20 Marks The Labour Market Is Described By The Following Labour Demand And Supply Functions D T 2 A W 1 (24.84 KiB) Viewed 52 times

Question 4 20 Marks The Labour Market Is Described By The Following Labour Demand And Supply Functions D T 2 A W 2 (22.96 KiB) Viewed 52 times

Question 4 20 Marks The Labour Market Is Described By The Following Labour Demand And Supply Functions D T 2 A W 3 (22.96 KiB) Viewed 52 times

Question 4 (20 marks) The labour market is described by the following labour demand and supply functions D(t) = 2 + a, W(1) + a,WC) + W(t) and (t) - Bo+, W(). The market is in equilibrium if (t) = $(t). Assume that do - 16, a, = 70, az -16. Bo = 400, B4 = 6. (a) What wage rate, W" is consistent with the labour market being in a long run steady-state, when labour supply equals demand? (4 marks) W(0) = (b) Find the time path of wages, when initially at time 0: 10, (0) - 4. Comment on your answers. (9 marks) dw dt See Next Page

Question 4 (20 marks) The labour market is described by the following labour demand and supply functions de ta,W(+W+WC) and () RW). The market is in equilibrium if (t) = $(t). Assume that a 16,470 -16, A-400B. = 6 (a) What wage rate, Wisconsistent with the labour market being in a long run steady-state when labour supply equals demand? (4 marks) WO) (b) Find the time path of wages, when initially at time-o 10, (0) 4. Comment on your answers (9 marks) See Next Page 5 45SMN 903 (c) With reference to the labour supply and demand functions you were given and your answers in (a), (b) and (c) is this labour market model economically plausible in the real world? (Answer must be typed). 7 marks)