Question

In: Economics

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: Ld = 40 – 2(w)

          Labour supply equation: Ls = −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 2 years ago
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