The paper "Economic Forecasting for Management" is a wonderful example of an assignment on macro and microeconomics. Q. 1 When technology increases, this means that new cost-effective methods of production have been devised. This leads to a decrease in the price of laptops. However, the quantity of laptops demanded does not change. This leads to a downward shift in the demand curve leading to the equilibrium position shifting from E0 to E1 as shown in the diagram below. Q. 2. Income elasticity of demand measures the degree of responsiveness of the demand for a certain good in relation to the changes in income levels (Thomas, 2003, p. 4).
The income elasticity of demand of 0.89 shows that this is s necessity good since its less than 1. This has been achieved through a mathematical calculation as shown below: Elasticity of demand (Eδ ) = % change in quantity demanded / % change in real income A diagram may be used to depict the above scenario as follows: Quantity Eδ slope Income The shape of the slope shows that the change is slightly sloping. In this case, it means that a 1% change in the level of income (whether an increase or a decrease) leads to a proportionate change in the level of quantity demanded by 0.89%. Q. 3 Minimum wage defines the lowest possible amount of money that a worker gets paid after the delivery of services for a certain pre-agreed period of time (Satya, 2007, p. 14; Alicia, & Michael, 2006, p. 5).
This could be hourly, weekly, or monthly. In the labor market, setting up minimum wages has a very significant effect on the wage-employment equilibrium grid. To illustrate this better, the diagram below is applied. supply curve wages Equilibrium point Demand curve Employment When the minimum wage is set, the graph shows dramatic changes as follows. Explanation: E is the equilibrium point for wage-employment before the minimum wage is set. Increasing the minimum wage: When the government decides to increase the level of minimum wage from W to W1, there is an increased level of supply for labor.
However, at this wage level, employers are only willing to employ L1. This creates a labor surplus. Decreasing the minimum wage: When the wage is reduced from W to W2 in the above diagram, the people are not willing to work at this kind of pay.
However, the employer is willing to take L2 levels of employment. This leads to a labor deficit in the labor market.
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