The City of Burnaby,B

question 15

Essay

The City of Burnaby,B.C.,would like to assess the impact of next year's immigration on the labour market for taxi driving.Suppose the city estimates the demand and supply equations for taxi drivers as follows: LD = 400 - 20w and LS = 60 + 20w.Based on immigration data,the city estimates that about 60 new drivers will enter the taxi driving sector next year.At the same time,immigration increases the demand for taxi services,but only for about 40 new drivers.
a)Calculate the equilibrium wage and employment in the labour market for taxi driving in Burnaby,B.C.,before the new wave of immigration.
b)Re-calculate the equilibrium wage and employment after immigration.
c)How many workers leave the labour force in the taxi driving sector after the new equilibrium would have been reached? Are these locals,or immigrants?
d)Draw a graph to show the effect of immigration.

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Definitions:

Operating Lease

A contract that allows for the use of an asset but does not convey rights of ownership of the asset.

After-Tax Cost

The actual cost to a company or individual after considering the effects of taxes, often used in evaluating the cost of financing options.

Leasing Analysis

It is the examination of the financial aspects of leasing to determine whether leasing is a more viable option than purchasing.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in alignment with the firm's goal of shareholder value maximization.