## Quantitative Problems

 1. Determine whether the following are positive or normative statements:(a) Illegal immigrants lower the wages of U.S. workers.(b) Child labor should be prohibited.(c) If child labor were prohibited, then it would not be profitable to hire children.(d) Employment is highly responsive to changes in the wage. 2. In many situations of economic interest, individual relationships are governed by factors such as affiliation to a specific class, trust, honor, and even love. Is it possible to analytically model these ideas? 3. Use the simple supply and demand framework to explain what would happen to wages and employment levels if there were an increase in (a) the demand for steel (Q), (b) the size of the labor force N. What does this latter finding suggest about the effects of immigration? 4. Academic economists often have the option of working in the private sector rather than in colleges and universities. Explain what would happen to the earnings of the typical economics professor if there were a sudden increase in the demand for private sector economists. 5. Describe the labor-market consequences that would result from the mutation of the avian H5N1 virus into a virulent and deadly human strain. 6. Let L denote the level of employment (measured in thousands of worker hours), and W the hourly wage. Suppose that the supply of labor is given by and that the demand for labor is . Calculate the equilibrium wage and level of employment.(a) What would happen if a union imposed a wage floor of \$20 per hour?(b) Ignoring part (a), what would happen if there was a sudden increase in the demand for labor? More specifically, suppose that at each wage, employers demand 15,000 more worker hours. 7. Most people leave their server a tip after eating out at a restaurant. Is their behavior rational or irrational? 8. Returning to Figure 1.8, assume that the cake allocation is at point A. However, suppose, regrettably, that Dave is obese and that his physician has advised him to refrain from eating cake. Equipped with this ammunition, Betsy argues that only point B is efficient. Is she correct? 9. (a) Rational individuals do as well as they can for themselves, within their respective environments and (b) an equilibrium is a feasible outcome in which everyone behaves rationally. Does it follow from (a) and (b) that an equilibrium is the best feasible outcome?