Homework 5, due Tuesday, March 7:

1. For experiment 5.2, construct the supply and demand diagram.  This requires
only the data on the number of workers with reservation wage 5, the number
of workers with reservation wage 12, and the number of firms, each of
which valued on worker at 20 and two workers at 30. [Hint: What is the
value of a second worker to the firm?]

2. What is the predicted wage and quantity employed?

3. Assess how well the theory worked for experiment 5.2 by comparing the
quantity and the average wage to the predictions4

4. What were predicted firm profits?  What are the predicted net profits
of workers? (Net profit of workers doesn't count the reservation wage; 
thus a worker with a reservation wage of 12 who earns a wage of 15 gets a
net profit of 3, while a worker with a reservation wage of 5 who earned
a wage of 15 earns a net profit of 10). 

5. For experiment 5.4, what were actual firm profits?  What were
the actual net profits of workers?

6. How many people were unemployed in 5.4?  How many were
involuntarily unemployed - that is, they would have preferred to work at
the average wage?

7. Construct the demand and supply diagram for experiment 5.4
 and draw a horizontal line representing the minimum wage of *15.

8. What is the predicted wage, quantity demanded and quantity supplied
at this wage? [Note: if the equilibrium wage is below the minimum wage,
the predicted wage is the minimum wage.]

9. Compare the actual average wage and quantity employed to the predicted
wage and quantity demanded.

10. What are the predicted firm profits and net profits of workers?  What
were the actual firm profits and net profits of workers?

11. What are the predicted firm profits and net profits of workers if
no minimum wage had been imposed?

12. How many people were unemployed in experiment 5.4?  Of those, how many were
involuntarily unemployed - that is, they would have preferred to work at
the minimum wage?  How many would work at a wage of *10?

13. Construct the supply and demand diagram for experiment 5.6, and draw 
in the minimum wage of *15. (Firms valued one worker at 30, two at 55, three 
at 75 and four at 95).

14. What is the predicted wage and quantity employed in 5.6?  Do you expect the
minimum wage have an effect in this experiment?

15. Did the minimum wage have an effect in this experiment?