List of top Macroeconomics Questions on Labour economics asked in GATE XH-C1

A dual economy consisting of a manufacturing sector (M) and an agricultural sector (A) is depicted in the figure below. O_MO_A is the total labour available in the economy of which O_MLS_M is the labour supply in the manufacturing sector before any migration was allowed among the labourers. The vertical axis in the left (right) side measures the wage in the manufacturing, W_M (agricultural, W_A) sector. LD_M (LD_A) is the demand of labour in the manufacturing (agricultural) sector with respect to O_M(O_A) as the origin. If wages are flexible, and labour is allowed to migrate between these two sectors, then it will be TRUE that

An incumbent firm (I) faces the possibility of entry by a challenger firm (C). If C enters, I may either accommodate or fight. If C does not enter, its payoff is 1, while I's payoff is 2. If C enters, and I accommodates, their payoffs are 2 and 1, respectively. However, if C's entry is met with a fight by I, their payoffs are 0 and 1, respectively. Which one of the following is a subgame perfect Nash equilibrium (SPNE) under perfect information ?

In an economy, the effort level of a worker in firm i is denoted by e; and depends on the wage W_i received by the worker from the firm, and the minimum wage Wo is set by the government. The effort function is given by
\(e_i(W_iW_0)=\sqrt{W_i-W_0}\)
If the firm employs N_i unit of workers, then the efficiency unit of labour employed by the firm is e_iN_i. The production is based on only the efficiency unit of labour, and the production function is given by
\(F(e_iN_i) = \log e (e_iN_i)\)
If the minimum wage set by the government is 10, and the profit maximizing firms sell the good in a competitive market at price P by choosing W_i and N_¡, then the profit maximizing wage set by the firm will be _______ (rounded off to one decimal place).