Assume that the labour demand equation for a fictional country is Ld= 30 – w, where...

Assume that the labour demand equation for a fictional country is L_d= 30 – w, where w is the wage per hour worked. Also, assume that the labour supply equation for that country is L_s= 0.5(w).

Instructions: Round your answers to the nearest whole number.

a. The equilibrium wage is $__ , and the equilibrium quantity of labour employed is __ workers.

b. At the equilibrium wage, ___ people are unemployed.

c. If the supply of workers increased, the number of unemployed would:

stay the same as long as the wage is free to quickly adjust.
decrease.
increase.

Solutions

Expert Solution

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solution

Ld=30-w

Ls=0.5w

so for equilibirum

Ld=Ls

30-w=0.5w

1.5w=30

w=20units

and from labour demand function

Ld=30-20

Ld=10 units

so wage = 20 units

labour employed = 10 units

and at equilibrium wage rate unemployment is zero

and ad labour supply increase the unemployment remain same as long as wages is free to quick adjust

Rahul Sunny answered 1 year ago

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