The supply curve for agricultural labour is given by W=6+0.1L, where is the wage (price per...

The supply curve for agricultural labour is given by W=6+0.1L, where is the wage (price per unit) and the L quantity traded. Employers are willing to pay a wage of $12 to all workers who are willing to work at that wage; hence the demand curve isW=12.(a) Illustrate the market equilibrium, if you are told that the equilibrium occurs where L=60. (b) Compute the supplier surplus at this equilibrium.

Expert Solution

Producer surplus means the amount received from selling a good minus the amount that the seller needed to receive, if he is willing to sell the good. Market equilibrium is at that point where the quantity demanded and quantity supplied are equal.

A. In first part, we know that maximum that a producer willing to pay for supply of labor for agriculture is $12. This means he is not going to beyond this level. And here it is given that L=60 ,demand (w) =12 , w is the price. So when we plot all the points on graph with the help of function given we came to know that when price (w) =$12 ,quantity supplied is 60 and demand curve is $12 .That shows market equilibrium point that is point E in graph. However if l =60 is not given then to be with the help of given data we can easily find its value.

B. In part b, we need to find producer surplus which is nothing but supplier surplus. Here it can be interpreted as - $12 is the maximum amount which a supplier Is willing to pay but when he pays less than the actual amount which he otherwise pay, the difference is said to be surplus for him. And up-to the level of equilibrium only he is able to earn surplus. That means after that level like at point G and h in graph, he will gave to pay extra or may be he incurred some loss. Producer always want to sell more when price are high but here he always prefer to pay less price and more supply so that quantity traded will be higher. In the given graph you can also see demand curve as demand curve w=$12 is given and demand curve always moves downward and supply curve always move upward. L=quantity traded, p=price which producer pays.

Rahul Sunny answered 2 years ago

Consider the case where the demand curve and supply curve for unskilled labour are given in...

Consider the case where the demand curve and supply curve for unskilled labour are given in the following table: (1) Wage Rate (/hour) (2) Wage Rate2 (/hour) (3) Q of Labour Demanded (hrs/week) (4) Wage Rate2 (/hour) (5) Q of Labour Supplied (hrs/week) 9.5 1000 1900 9 1200 1800 8.5 1400 1700 8 1600 1600 7.5 1800 1500 7 2000 1400 6.5 2200 1300 1. What is the equilibrium wage rate? 2. What is the quantity of labour hours hired...

Suppose an individual’s weekly labour supply is given by L = -10 + w, where L...

Suppose an individual’s weekly labour supply is given by L = -10 + w, where L is labour supply in hours and w is the hourly after-tax wage. Assume that firms are willing to pay a before-tax wage of $40/hr. In the absence of taxation, how many hours per week will the individual work? What are weekly earnings? Illustrate the choice in a diagram. [4] Suppose the government institutes a 25% tax on labour income. What is the after tax...

The demand curve for gardeners is GD = 19 – W, where G = the number of gardeners, and W = the hourly wage. The supply curve is GS = 4 + 2 W.

The demand curve for gardeners is GD = 19 – W, where G = the number of gardeners, and W = the hourly wage. The supply curve is GS = 4 + 2 W.a. Graph the demand curve and the supply curve. What is the equilibrium wage and equilibrium number of gardeners hired?b. Suppose the town government imposes a $ 2 per hour tax on all gardeners. Indicate the effect of the tax on the market for gardeners. What is...

Consider the market for unskilled labour where the equilibrium wage rate is $6 per hour. A....

Consider the market for unskilled labour where the equilibrium wage rate is $6 per hour. A. Suppose the government introduces a price floor of $5 on the market wage. Is price floor binding in this case? What effects will this have on the market outcome and welfare? B. Now suppose the government introduces a price floor of $7 on the market wage. Is price floor binding in this case? What effects will this have on the market outcome and welfare?...

The market demand for labour is given by w = 28 – 0.05L, where w is...

The market demand for labour is given by w = 28 – 0.05L, where w is the wage rate ($/week) and L is the number of workers the firm want to employ. The market supply of labour is given by w = 2 + 0.05L, where w is the wage rate ($/hr) and L is the number of workers who want to work. What is the equilibrium wage rate? If the government introduces the minimum wage rate of $15.75/hr, what...

Assume the labor supply curve is given by w=E/2+1 and the labor demand curve by w=-E/2+4 where E stands for employee-hours (or number of workers) and w is the wage rate.

(payroll tax, deadweight loss) Assume the labor supply curve is given by w=E/2+1 and the labor demand curve by w=-E/2+4 where E stands for employee-hours (or number of workers) and w is the wage rate.a) Assume the government assesses a tax of $t on workers for every employee-hour. Compare the resulting net wage and the total wage cost with this tax in place to the wage rate in the case where no tax is assessed. In particular, how is the...

Assume that output is given by with price of labour L = w and price of...

Assume that output is given by with price of labour L = w and price of capital K = r 1.If capital in the short run is fixed at what is the short-run total cost? 2.Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case?

3. The market demand for labour is given by w = 18 – 0.05L, where w...

3. The market demand for labour is given by w = 18 – 0.05L, where w is the wage rate ($/hr) and L is the number of workers the firm want to employ. The market supply of labour is given by w = 10 + 0.15L, where w is the wage rate ($/hr) and L is the number of workers who want to work. The government introduces the payroll tax $1 per hr per worker. a. What is the portion...

1. The market demand for labour is given by w = 20 – 0.05L, where w...

1. The market demand for labour is given by w = 20 – 0.05L, where w is the wage rate ($/week) and L is the number of workers the firm want to employ. The market supply of labour is given by w = 10 + 0.05L, where w is the wage rate ($/week) and L is the number of workers who want to work. a. What is the equilibrium wage rate? b. If the government introduces the minimum wage rate...

1. The market demand for labour is given by w = 18 – 0.05L, where w...

1. The market demand for labour is given by w = 18 – 0.05L, where w is the wage rate ($/week) and L is the number of workers the firm want to employ. The market supply of labour is given by w = 10 + 0.05L, where w is the wage rate ($/hr) and L is the number of workers who want to work. a. What is the equilibrium wage rate? b. If the government introduces the minimum wage rate...

Question