Question

In a competitive labor market, demand for workers is QD 20,000 100W, and supply is Qs 4,000 + 1,900W, where Q is the quantity of workers employed and W is the hourly wage. a) What is the initial equilibrium wage and employment level? b) Suppose that the government decides that $9 per hour is the minimum allowable wage in any market. What would the new employment level be? c) What would happen to total payments to labor? d) Would there be any excess supply of labor? If so, how much?

Answer 1

Given dat in a competthe alomarket , deman d Supply İç ttu uantity of waters einpeyed was e equtlomum point

So,was ehour is empleymant leve s aoooo - (ooxs) 19,200 market Demand tor u orice r Qo 9pply of labeur i a40004+Rco) 19, loo.

Atage of there eu sa excess pyof be that ts → 21,100-19,100 ate Tota nt als o oould increajc Exces supply of nbar coald b more

Thus additiomte people twho would moreosthat they he ) ao addition tJchs , that wauld be unobteinabo at tte hihe ate