In a competitive labor market, shirking on the job can be a problem. In this market for labor services, the demand for labor is expressed as:
W = where W is wage rate (dollars per hour) and L is number employed per unit of time. The no shirking constraint (NSC) is expressed as:
NSC = where NSC is the minimum wage workers need not to shirk, and L is the number employed per unit of time. Assume that the labor force L^* = 150,000. Determine the following:
a. the level of unemployment that would result when firms pay the efficiency wage
b. the market clearing wage
c. the efficiency wage

Question

In a competitive labor market, shirking on the job can be a problem. In this market for labor services, the demand for labor is expressed as:
W =

where W is wage rate (dollars per hour) and L is number employed per unit of time. The no shirking constraint (NSC) is expressed as:
NSC =

where NSC is the minimum wage workers need not to shirk, and L is the number employed per unit of time. Assume that the labor force L^* = 150,000. Determine the following:
a. the level of unemployment that would result when firms pay the efficiency wage
b. the market clearing wage
c. the efficiency wage

Quizplus · Accepted Answer

The Answer of In a competitive labor market, shirking on the job can be a problem. In this market for labor services, the demand for labor is expressed as: W = where W is wage rate (dollars per hour) and L is number employed per unit of time. The no shirking constraint (NSC) is expressed as: NSC = where NSC is the minimum wage workers need not to shirk, and L is the number employed per unit of time. Assume that the labor force L^* = 150,000. Determine the following: a. the level of unemployment that would result when firms pay the efficiency wage b. the market clearing wage c. the efficiency wage

In a Competitive Labor Market, Shirking on the Job Can