ECON 3205 Online Spring 2016 Homework 3 – Chapters 8 & 9
Due – Wednesday, February 17th
***SHOW WORKING***
Self-Check Questions
Chapter 8
1. Suppose the adult population over the age of 16 is 237.8 million and the labor force is 153.9 million (of whom 139.1 million are employed). How many people are “not in the labor force?” What are the proportions of employed, unemployed and not in the labor force in the population?
Hint: Proportions are percentages.
ANSWER: The population is divided into those in the labor force and those not in the labor force. The number of adults not in the labor force is 237.8 – 153.9 = 83.9 million. Since the labor force is divided into employed persons and unemployed persons, the number of unemployed persons is 153.9 – 139.1 = 14.8 million. The adult population has the following proportions:
139.1/237.8 = 58.5% employed person
14.8/237.8 = 6.2% unemployed persons
83.9/237.8 = 35.3% persons out of the labor force
6. Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?
ANSWER: The increase in labor supply was a social demographic trend, it was not caused by the economy falling into a recession. So the influx of women into the work force increased the natural rate of unemployment.

Chapter 9
1. Table 9.4 shows the prices of fruit purchased by the typical college student from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column 2?

Items | Qty | (2001) Price | (2001) Amount Spent | (2002) Price | (2002) Amount Spent | (2003) Price | (2003) Amount Spent | (2004) Price | (2004) Amount Spent | Apples | 10 | $0.50 | | $0.75 | | $0.85 | | $0.88 | | Bananas | 12 | $0.20 | | $0.25 | | $0.25 | | $0.29 | | Grapes | 2 | $0.65 |