Answered

Get the answers you need at Westonci.ca, where our expert community is dedicated to providing you with accurate information. Explore a wealth of knowledge from professionals across various disciplines on our comprehensive Q&A platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

Due to a downturn the wage of entry level workers has declined by 10 per cent, as a
result 100 entry-level workers get jobs and around 30 senior workers (15 %) would be
laid off.
(a) (5 points) Calculate the cross elasticity of demand for senior workers? Are senior
workers and entry-level workers gross complements or gross substitutes?
(b) (7 points) Which effect dominates in our example: substitution or scale effect?
How?
(c) (6 points) How would the demand curve for senior workers change if the wage paid
to entry-level workers rises?

Sagot :

The cross elasticity of demand for senior workers is 1.5. Senior workers and entry-level workers are gross complements.

The scale effect dominates in this example.

If the wage of the entry level workers increase, the demand curve would shift to the right.

What is the crosss price elasticity?

Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.

Cross price elasticity = 15% / 10 = 1.5

Complement goods are goods or resources that are used together. As a result of the decline in wages, senior workers would be laid off. This means that senior workers and entry level workers work together.

What is the effect on the demand curve if the wages of entry level workers increase?

If the wage of the entry level workers increase, the demand for senior workers wouuld increase. This would lead to a shift to the right of the demand curve for senior workers.

To learn more about cross price elasticity, please check: https://brainly.com/question/26054575

We appreciate your time. Please come back anytime for the latest information and answers to your questions. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.