# AP ECON 3240 Week 8 Exercises:

1. H+T=5000, w=30000 per year, r=10%. Compute MRP with two-period model.
2. Q=20 L , and P=10
a. Derive labor demand curve
b. If w=10, compute labor employment and output level
c. Payroll tax of \$1 is imposed. Compute the labor employment and output level.
Compute the total tax payment.
3. Q=20 L , and P=10, and labor supply is given that: w=Ls
a. Compute labor employment and output level
b. Payroll tax of \$1 is imposed. Graphically show the labor employment, output level,
and the total tax payment.
4. Labor Demand: w=100-Ld, Labor Supply: w=Ls, and the payroll tax rate of 10%.
a. Compute labor employment and output level
b. Payroll tax of \$1 is imposed. Compute the labor employment, output level, and the
total tax payment, and graphically show them.
5. Monopsony Model
AFC w=2+2L
MRP w=12-L
a. Compute labor employment and output level
b. Payroll tax of \$1 is imposed. Compute the labor employment, output level, and the
total tax payment, and graphically show them.
6. Ld=200-2w, Ls=20+2w
Compute labor employment and output level
a. Payroll tax of \$10 is imposed. Compute the labor employment, output level, and the
total tax payment, and graphically show them.
b. Payroll tax of 10% is imposed. Compute the labor employment, output level, and the
total tax payment, and graphically show them.
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7. Ld=200-2w, Ls=100 and is perfectly inelastic
a. Compute labor employment and output level
b. Payroll tax of \$10 is imposed. Compute the labor employment, output level, and the total tax payment, and graphically show them.
c. Payroll tax of 10% is imposed. Compute the labor employment, output level, and the total tax payment, and graphically show them.
8. Ld=200-2w, Ls is perfectly elastic and wage rate is \$50 per unit
d. Compute labor employment and output level
e. Payroll tax of \$10 is imposed. Compute the labor employment, output level, and the total tax payment, and graphically show them.
f. Payroll tax of 10% is imposed. Compute the labor employment, output level, and the total tax payment, and graphically show them.
9. Monopsony Model
AFC w=2+2L
MRP w=12-L
Minimum wage of 8 imposed, compute the employment level. Minimum wage of 8 imposed, compute the employment level.
Is Is the employment level increased? the employment level increased?
10. Chapter 6 #2, 3, 5, Chapter 7: #1, 4, 5, 6 etc.

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