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Assume that labor supply and labor demand are described by the following equation -labor supply: L=5w -labor demand: L=110-0.5w where w=wage expressed in dollars per hour, and L(s) and L(d) are expressed in millions of workers. a. find the equilibrium wage and the equilibrium level of employment. b. assume that there is a shock to the economy, such that the labor demand curve is now described by the equation: L(d)=55-0.5w If wages are flexible, what will be the new equilibrium wage and level of employment? show your work. c. Now assume that wages are rigid at the level you found in part (a). What will employment be at this wage? How many workers will be unemployed?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91677644

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