Question

In: Economics

Consider a market that has a labor demand function of LD=440-10w and labor supply function of LS=220+w. Find the equilibrium wage

1a. Consider a market that has a labor demand function of LD=440-10w and labor supply function of LS=220+w. Find the equilibrium wage. (Answer format is 35)

b. Now find the equilibrium labor quantity.

c. The government imposes a payroll tax on this market of 10%. If we think of the tax in terms of the wage paid by employers, what are the new labor demand and supply functions?

d. What is the new equilibrium wage?

(Answer format is 35.2) Round to 1 decimal place, if necessary.

e. How much labor is now used?

Expert Solution

Hi! Welcome to Chegg!

1.

a.

Equilibrium:

LD = LS

440 - 10w = 220 + w

220 = 11w

Equilibrium wage = 20.

b.

Equilibrium quantity = L = 220 + 20 = 240.

c.

With payroll tax of 10%:

Labor demand = LD = 440 - 10w(1.10) = 440 - 11w

Labor Supply: LS = 220 + w

d.

Equilibrium after payroll tax:

LD = LS

440 - 11w = 220 + w

220 = 12w

Equilibrium wage = 18.33.

e.

Labor used = 220 + 18.33 = 238.33.

Rahul Sunny answered 2 years ago

Labor demand: Ld = 210 – 2W Labor supply: Ls = 120 + W W =...

Labor demand: Ld = 210 – 2W Labor supply: Ls = 120 + W W = the wage rate. If the government sets the minimum wage rate at $40 per hour, Ld or employment will decline by ___ (compare with equilibrium employment). Select one: A. 5 B. 10 C. 15 D. 20 E. 25

1. Consider the labor supply and labor demand functions below, where w is the hourly wage...

1. Consider the labor supply and labor demand functions below, where w is the hourly wage and h is the hours worked per day. Labor supply: w=5+2.5´h Labor demand: w=26-0.5´h Compute the daily profit of the firm assuming that other factors of production are all costless. Show all the steps. Also, draw the labor supply and labor demand lines, and identify the economic profit area. (15 points) What if labor demand is less elastic; e.g., labor demand: w=26-h? Would daily...

Imagine a labor market where Ld = 128-9w, while Ls= 7w-32, where w is the hourly...

Imagine a labor market where Ld = 128-9w, while Ls= 7w-32, where w is the hourly wage rate. (a)What is the equilibrium level of employment and wage? (b) If the present minimum wage is $7.15/hr. and the government raises it $8.50/hr, how many workers will lose their jobs? What is the unemployment rate? (c) If instead the government voted to raise the minimum wage to $12/hr, how many workers will lose their jobs? What is the unemployment rate? (d) Assume...

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...

With regard to the demand and supply of labor, explain the concept of the equilibrium wage

The market for semiskilled labor can be represented by the following supply and demand curves: LD...

The market for semiskilled labor can be represented by the following supply and demand curves: LD = 32000 - 4000W LS = 8000 + 6000W, where L = millions of person hours per year and W = the wage in dollars per hour. a. Calculate the equilibrium price and quantity that would exist under a free market. What impact does a minimum wage of $3.35 per hour have on the market? b. The government is contemplating an increase in the...

28.)In a competitive labor market, if the supply of labor decreases how will the equilibrium wage...

28.)In a competitive labor market, if the supply of labor decreases how will the equilibrium wage rate and employment change? Wage Rate Employment a.) Increase Increase b.) Increase Decrease c.) Decrease Increase d.) Decrease Decrease e.) No change Decrease 29.)How will a decrease in demand for computer repairs impact the demand and wage rate for skilled computer technicians? Wage Rate Employment a.) Decrease Decrease b.) No change Decrease c.) Increase Decrease d.) Increase Increase e.) No change Increase 30.)Which of...

5. Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply...

5. Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply curves that follow. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used...

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?

3. Suppose the demand for labor is given by LD = 12 – 1/5 W (or...

3. Suppose the demand for labor is given by LD = 12 – 1/5 W (or W = 60 – 5L), and the domestic supply of labor is given by LS = W – 6 (or W = L + 6) a) Calculate the market-clearing quantity of labor and the wage and graph (and label) everything: L* = ____________ W* = ___________ b) Suppose that newly arriving immigrants have LS = 2W – 12 and are as productive as domestic...