9. Consider a competitive labor market in which firms hire full-time workers according to the following...

9. Consider a competitive labor market in which firms hire full-time workers according to the following labor demand schedule: W = 100 – 2L, where L is the number of workers and W is the daily wage. The supply of labor is given by the equation W = 10 + L.

(a) What will be the market daily wage?

(b) How much surplus is generated for firms that hire workers?

Now suppose the government imposes a minimum daily wage of $60.

(c) How many workers will be employed in this case?

(d) How much is the reduction in total surplus caused by minimum wage?

Expert Solution

Rahul Sunny answered 2 years ago

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