Labour shortages have become a common issue for many Employers (E). Since the beginning of the pandemic, many Workers (W) have quit their jobs for 1) fear of getting sick, 2) being burnout, or 3) better opportunities elsewhere. To retain Workers, Employers can increase wages or improve working conditions (such as allowing work at home). And to ensure businesses do not shut down, Governments (G) can provide financial aid to Employers or provide no financial aid to contain their rising debts. Figure 2 depicts the extensive-form representation of this game. Aid 2,2,2 G Increase No 2,2,1 E Improve Aid Stay 2,1,2 G Figure 2 W No Aid G 4, 3,3 1,2,2 Quit Increase No 3,4,3 E Improve Aid 3, 3, 4 G No 3,3,3 5) Explain in a maximum of two lines whether or not this is a game of perfect information. 6) Explain in a maximum of two lines whether or not this is a game of complete information. 7) Find the subgame perfect Nash equilibrium(a), if any, by highlighting each player's equilibrium strategy (ies) on Figure 2A in the answer booklet.

Labour shortages have become a common issue for many Employers (E). Since the beginning of the pandemic, many Workers (W) have quit their jobs for 1) fear of getting sick, 2) being burnout, or 3) better opportunities elsewhere. To retain Workers, Employers can increase wages or improve working conditions (such as allowing work at home). And to ensure businesses do not shut down, Governments (G) can provide financial aid to Employers or provide no financial aid to contain their rising debts. Figure 2 depicts the extensive-form representation of this game. Aid 2,2,2 G Increase No 2,2,1 E Improve Aid Stay 2,1,2 G Figure 2 W No Aid G 4, 3,3 1,2,2 Quit Increase No 3,4,3 E Improve Aid 3, 3, 4 G No 3,3,3 5) Explain in a maximum of two lines whether or not this is a game of perfect information. 6) Explain in a maximum of two lines whether or not this is a game of complete information. 7) Find the subgame perfect Nash equilibrium(a), if any, by highlighting each player's equilibrium strategy (ies) on Figure 2A in the answer booklet.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter12: Labor Markets And Labor Unions

Section: Chapter Questions

Problem 12QFR

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21. How does increased immigration affect the labor market? How would the equilibrium wage and the equilibrium quantity of labor be affected?