Demand and Supply of Labour Are Given By

question 77

Essay

Demand and supply of labour are given by:
LD = 250 - 4w
LS = 50 + w
where w is the real wage and LD and LS are the quantities of labour demanded and labour supplied,respectively.
a. What are the equilibrium wage and quantity of employment?
b. If the government imposed a minimum wage of $45,what would be the new quantities of labour and demanded and supplied?
c. How many people would lose their jobs because of the minimum wage,and how many people are now unemployed?
d. Draw a graph to show your results of parts (a),(b),and (c).

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Definitions:

MRC = MRP

An economic condition where a firm's Marginal Resource Cost equals its Marginal Revenue Product, optimizing resource allocation.

Purely Competitive Conditions

Market conditions where many firms compete with identical products, easy market entry and exit, and no single firm can affect the market price.

Resource Demand Curve

A graph showing the relationship between the price of a resource and the quantity of that resource demanded by employers or producers.

Marginal Product

The marginal product is the additional output generated by employing one more unit of a specific input, ceteris paribus. It helps businesses decide on the optimal level of input usage.