(2) A region has an automobile manufacturing industry that employs labor from the local labor market....

(2) A region has an automobile manufacturing industry that employs labor from the local labor market. The demand for labor is represented by the following equation:

D(L)=100-5W

And the supply of labor by the equation:

S(L)=25

Where, W is the wage rate, D(L) is the demand for labor and S(L) is the supply of labor.

a. Find the equilibrium wage rate paid workers by the automobile industry.

b. Find the equilibrium amount of labor demanded by the automobile industry.

c. Draw a supply and demand diagram to illustrate the labor market.

Solutions

Expert Solution

(a) At equilibrium : Demand for labor equals supply.

100- 5W =25

5W = 75

W = 15 (Equilibrium wage rate paid)

(b) Equilibrium amount of labor demanded by the automobile industry = 25 workers.

When W=0 , D= 100

When D=0 , W= 20

And supply curve is vertical at 25 .

By plotting these we get the demand and supply of labor as shown below:

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Andy has a monopoly in the sale of engineering services in the local market and employs...

Andy has a monopoly in the sale of engineering services in the local market and employs only highly skilled labour. Suppose the supply of labour to Andy’s firm is given by L=100w, demand for labor is given by L = 1000–100MRPL and MC of labour is given by MCL =L/50, where L is the labour demanded and supplied and w is the wage rate per hour. a)If Andy has monopoly power in the market, how many workers will he hire...

Suppose that wages in the automobile industry increase. The labor supply curve for other types of...

Suppose that wages in the automobile industry increase. The labor supply curve for other types of manufacturing jobs should shift ____ and the number of workers available at any given wage rate will _____. right; decrease left; increase left; decrease right; increase

In a local market for unskilled labor, the quantity of labor supplied is 8 million hours...

In a local market for unskilled labor, the quantity of labor supplied is 8 million hours at $8 per hour and 10 million hours at $9 per hour. The employers would hire 8 million hours of labor at $8 per hour and 4 million hours at $9 per hour. The local minimum wage is currently $7.50, but the city council is considering a proposal to raise it to $9 per hour. In this situation, which of the following is true?...

Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic...

Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?

Star Computer is manufacturing computer in a local market. Because of the competitiveness of the market,...

Star Computer is manufacturing computer in a local market. Because of the competitiveness of the market, the CEO wants to begin by considering about the pricing of the computers to ensure that selling expensive products at the wrong price is not compromising profit margins. The computers are individually specified by customers for each order and pricing has been on a production cost plus a mark-up of 45%. At present the company uses an absorption costing system based on labor hours...

Automobile Manufacturing Report important trends that impact the industry, addressing each of these areas: Economic trends...

Automobile Manufacturing Report important trends that impact the industry, addressing each of these areas: Economic trends like employment, wages, and job creation Regulations, political influences, or legal considerations Social and cultural trends such as consumer beliefs, behaviors, living arrangements, gender/ethnicity patterns, etc. Technology trends, such as automation, e-commerce, social media, energy sources, etc.

What kind of market structure prevalent in the Indian Automobile industry? What are the Maruti’s competitive...

What kind of market structure prevalent in the Indian Automobile industry? What are the Maruti’s competitive advantages? How can Maruti sustain its profitability in the future? Need the answer as per the assignment as it is the assignment question. More than 250 words atleast. Please refer the case MARUTI SUZUKI INDIA LIMITED: SUSTAINING PROFITABILITY in google.

Discuss industry that will more likely to be promising in consideration of local and global market...

Discuss industry that will more likely to be promising in consideration of local and global market outlooks in year 2021 as well as the impacts from the industrial revolution 4.0 and covid-19 pandemic. 150 no less please

Suppose there is a local employment (i.e., labor) market characterized by the following supply and demand...

Suppose there is a local employment (i.e., labor) market characterized by the following supply and demand functions: Quantity Supplied = 8*Wage Quantity Demanded = 150 - 2*Wage a). What is the equilibrium number of workers and market wage?

2. Draw a graph of the labor market that shows the impact of reduction in labor...

2. Draw a graph of the labor market that shows the impact of reduction in labor demand for two cases (a) wages are perfectly flexible, and (b) wages are perfectly inflexible (do not change). Show what happens to labor hours in both cases, and to wage in both cases. Label everything clearly.

Subjects