Question

The graph represents a labor market. What is the equilibrium hourly wage? per hour Price ($ per hour) What is the equilibrium number of hours worked? hours Identify all the factors that would cause the equilibrium 0 2 4 6 8 10 12 14 16 18 wage to increase. Quantity (hours) increase in labor demanded decrease in labor demanded increase in labor supplied decrease in labor supplied

Answer 1

Part A

The equilibrium in the labor market is determined by the intersection of demand for labor and the supply of labor. So, the equilibrium wage rate is $5 per hour

Part B

Equilibrium number of hours worked in 12 hours

Part C

The factors that would cause the equilibrium wage to increase is,

Increase in labor demand

Decrease in labor supplied