Suppose the Summer Labour Market for Construction Workers in the City

question 48

Essay

Suppose the summer labour market for construction workers in the city of Red Deer is described by the equations LD = 500 - 10w and LS = -100 + 10w, where L is the number of workers and w is hourly wage.
a) Draw the labour supply and demand curves.
b) Find the equilibrium wage and employment.
c) How much is the unemployment rate in equilibrium?
d) Suppose that 50 less workers are needed in winter in equilibrium compared to the summer equilibrium employment. Calculate the winter equilibrium wage, and show in a graph the winter labour market model compared to the summer one.

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