Can you help me find the solution for this question? Consider an economy that in
ID: 1242542 • Letter: C
Question
Can you help me find the solution for this question?Consider an economy that initially has a labor force of 2000workers. Of these workers, 1900 are employed and each works 40hours per week. Ten units of output are produced by each hour oflabor.
(a) What is the total number of hours worked per week in theeconomy? What is the total output per week in the economy? What isthe labor productivity per hour? What is the labor productivity perworker in a week? What is the unemployment rate?
(b) The economy enters a recession. Employment falls by 4% and thenumber of hours per week worked by each employed worker falls by2.5%. In addition 0.2% of the labor force becomes discouraged atthe prospect of finding a job and leaves the labor force. Finally,suppose that whenever total hours fall by 1%, total output falls by1.4%. During the recession, what is the size of the labor force?How many workers are unemployed and what is the unemployment rate?What is the total output per week in the economy? What is the laborproductivity per hour? What is the labor productivity per worker ina week?
Explanation / Answer
Total number of hours per week= 1900*40 = 76,000 hours/week Total Output per week = 76,000*10 = 760,000 units/week Labor Productivity per hour = 1,900*10 = 19,000 units/hour Labor productivity per worker in a week = 40*10 = 400 units/workerin a week Unemployment rate = (2,000-1,900)/2,000 = 5% (b) Employment - 4% Hours per week each employed -2.5% 0.2% labor force(4) leaves labor force if total hours work - 1%, total output -1.4% Hours per week by each worker = 40 * 97.5% = 39 hours Labor force size = 2000-4 = 1996 Employed = 1,900*96% = 1824 Unemployment rate = (1996-1824)/1996 *100% = 8.62% Total hours work = 39*1824 = 71,136 hours/week % decrease in hours= (76,000-71136)/76,000 *100% = 6.4% % decrease in output = 6.4%*1.4% = 8.96% Total out put per week = 760,000 * 91.04% = 691,904 units/week Labor productivity per hour = 691,904/71,136 = 9.73 units/hour Labor productivity per worker in a week = 691,407/1824 = 379.06units/worker in a week
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