1. Current Labor Market Conditions
Chapter three discusses labor markets. Use the Internet to find current information about U.S. labor markets. Open the homepage of the Bureau of Labor Statistics, http://www.bls.gov, and find the answers to the following questions:

1. What is the latest national unemployment rate?
   
   
2. What is the latest national unemployment level?
   
   

Click on the Employment Situation Summary.

1. What category of workers had the lowest unemployment rate?
   
   
2. What were the average hourly earnings?
   
   

Go back to the homepage and click on State Unemployment Data.

1. What state has the lowest unemployment rate?
   
   
2. What state has the highest unemployment rate?
   
   

2. Energy Crisis in California
Read "The Cause of the California Electricity Shortages: 'Price Controls, by Thomas Sowell.

Draw a diagram containing demand and supply curves to illustrate the effect of a price ceiling on the retail price of electricity.

1. Sowell notes that the electricity shortage is the result of rising wholesale costs of electricity combined with a price ceiling on retail prices. Use a diagram containing demand and supply curves to illustrate why an increase in wholesale electricity rates caused the shortage to become more severe in 2001.
   
   

1. As the diagram above suggests, an effective price ceiling (one that is below the equilibrium price) results in a shortage (since Q' is less than the quantity supplied at the ceiling price of Pc).
   
   

As the diagram above suggests, rising wholesale prices increase the cost of distributing electricity to households. This leads to a reduction in the supply of electricity and a worsening of the shortage. (To see this, note that the new quantity supplied Q" is less than Q'.)