A firm’s labour demand and labour supply equations are shown below.

A firm’s labour demand and labour supply equations are shown below.

          Labour demand equation: L_d = 40 – 2(w)

          Labour supply equation: L_s = −20 + 3(w),

where w is the wage per hour worked.

Instructions: Round your answers to the nearest whole number.

a. The equilibrium wage is $___ , and the equilibrium quantity of labour employed is ___ people.

b. The workers, thinking that their wages are too low, decide to strike. After tense negotiations, the firm decides to raise the wage by 50 percent.

    After the wage increase,____ people are unemployed.

Solutions

Expert Solution

a) the equilibrium price is $12, and the equilibrium quantity of labour employed is 16 people

b) after the wage increase, 12 people are unemployed.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Consider the following supply and demand equations in the market for labour. Supply: w=L Demand: w=...

Consider the following supply and demand equations in the market for labour. Supply: w=L Demand: w= 500−L. Use these equations to respond to the following questions. (a) What is the market equilibrium price and quantity? (b) Under a free market, what is the Total Surplus? (c) Suppose that the government enacts a minimum wage of w= 400. What is theTotal Surplus? (d) What is the Surplus amount of labour under the minimum wage?

Consider the following demand and supply equations in the market for labour. Supply: W = 10...

Consider the following demand and supply equations in the market for labour. Supply: W = 10 + (1/3) L Demand: W = 1,000 − (2/3) L Show your work as you respond to the following questions. What is the market equilibrium wage and quantity? (5%) The government implements a minimum wage of W = 370. What is the Consumer Surplus? (5%) Calculate the Producer Surplus under a minimum wage of W = 370. (5%) Find the Deadweight Loss under a...

Consider the following demand and supply equations in the market for labour. Supply: W = 10...

Consider the following demand and supply equations in the market for labour. Supply: W = 10 + (1/3)L Demand: W = 1, 000 − (2/3)L Show your work as you respond to the following questions. (a) What is the market equilibrium wage and quantity? (b) The government implements a minimum wage of W = 370. What is the Consumer Surplus? (c) Calculate the Producer Surplus under a minimum wage of W = 370. (d) Find the Deadweight Loss under a...

Assume that the labour market can be described by the following supply and demand equations: S:e...

Assume that the labour market can be described by the following supply and demand equations: S:e = a + bP + cW D:e = ? + ?P + ? W where e is the log of employment, W is the log wage, and P is a log of the “population.” a) Interpret b and ?. Explain how immigration may shift the population. b) Solve for the equilibrium wage and employment level as a function of the population. Show every step.

. The (inverse) equations for the supply and demand for French Champagne are given below. Supply:...

. The (inverse) equations for the supply and demand for French Champagne are given below. Supply: P = 40 + ¼Q Demand: P = 100 – ½Q [Half point for each question] a) compute the equilibrium price and quantity of Champagne. b) Suppose and excise tax (i.e. a tax paid by producers) of $18 per bottle is imposed. What are the equations for the new supply and demand curves? What is the new EQ price and quantity? Specify what the...

3. The (inverse) equations for the supply and demand for French Champagne are given below. Supply:...

3. The (inverse) equations for the supply and demand for French Champagne are given below. Supply: P = 40 + ¼Q Demand: P = 100 – ½Q [Half point for each question] a) compute the equilibrium price and quantity of Champagne. b) Suppose and excise tax (i.e. a tax paid by producers) of $18 per bottle is imposed. What are the equations for the new supply and demand curves? What is the new EQ price and quantity? Specify what the...

Given below are the demand schedule and supply schedule for the labour market for supervisors. Remember...

Given below are the demand schedule and supply schedule for the labour market for supervisors. Remember that demand for labour represents the employers’ demand for workers, while supply represents the workers’ willingness to work. Graph the demand and supply curve on one graph and determine equilibrium in this market. STATE the equilibrium. Label the graph properly. ( a properly labeled and accurate graph, one for clearly identifying and stating equilibrium –both price and quantity) Please state the wage and quantity...

Answer the questions below using the following equations for supply and demand where Q is the...

Answer the questions below using the following equations for supply and demand where Q is the number of computers and P is the price per computer. QD (P) = 60 - 2P C(Q) = 15Q a. Suppose the government determines that a fee of $2 per computer will be implemented to cover pollution externalities in production. What will be the price and quantity under perfect competition? Under monopoly? b. Do consumers LOSE more surplus from the $2 fee under monopoly...

Demand for labour is LD = 45 – 4W, labour supply is LS = 8W, where...

Demand for labour is LD = 45 – 4W, labour supply is LS = 8W, where W is hourly wage and L is labour measured in thousands of labour hours per year. a) Find equilibrium employment and wage in a competitive labour market. b) Suppose government introduces minimum wage at Wmin = $4. Calculate and show on diagram the number of jobs destroyed and the resulting unemployment. c) Suppose that government introduces a wage subsidy program per hour: for each...

1. The firm’s demand schedule for labour is a negative function of the wage because as...

1. The firm’s demand schedule for labour is a negative function of the wage because as the firm uses more labour it has to utilise poorer-quality labour and, hence, pays a lower wage. True or False? Explain. 2. Firms often respond to decreases in demand by laying off some of their workforce. However, some groups of workers are more likely to be laid off than others. Why？ 3. Explain why a minimum-wage increase, over a certain range, would lead to...

Subjects