Answer Happy

1. In 2004, the country of Ruba was suffering a period of high unemployment. The new president Clang appointed as his chief economist Laurel Tiedye. Ms. Tiedye and her staff estimated the supply-and-demand curves of labour from data obtained from the secretary of labour, Robert Small: Qu= 100 – 5 W Qs = 10 W - 20 where Q is the quantity of labour supplied/demanded in millions of workers and W is the wage rate in slugs, the currency of Ruba. (a) Currently, the law in Ruba says no worker shall be paid less than nine slugs per our. Estimate the quantity of labour supplied, the number of unemployed, and the unemployment rate. (b) President Clang, over the objection of Secretary Small, has recommended to the Congress that the law be changed to allow the wage rate to be determined in the market. If such a law were passed, and the market adjusted quickly, what would happen to total employment, the size of the labour force, and the unemployment rate? Show the results graphically. (c) Will the Rubanese labour market adjust quickly to such a change in the law? Why or why not?