Consider the Following Model of the Labor Market:
Labor Supply $L ^ { 5 } = \bar { a } \times w + \bar { \ell }$

question 5

Multiple Choice

Consider the following model of the labor market:
Labor supply: $L ^ { 5 } = \bar { a } \times w + \bar { \ell }$
Labor demand: $L ^ { d } = \bar { f } - w$
The values of the equilibrium quantity of labor, L, and wage, w, are:

• A) \(L ^ { * } = ( \bar { a } \bar { f } + \bar { \ell } ) / ( \bar { \ell } + \bar { a } ) ; w ^ { * } = ( \bar { f } - \bar { \ell } ) / ( \bar { \ell } + \bar { a } )\)
• B) \(L ^ { * } = ( \bar { a } \bar { f } + \bar { \ell } ) / ( \bar { \ell } + \bar { a } ) ; w ^ { * } = ( \bar { f } - \bar { \ell } ) / ( \bar { \ell } - \bar { a } )\)
• C) \(L ^ { * } = ( \bar { a } \bar { f } + \bar { \ell } ) / ( \bar { \ell } + \bar { a } ) ; w ^ { * } = ( \bar { f } + \bar { \ell } ) / ( \bar { \ell } + \bar { a } )\)
• D) \(L ^ { * } = ( \bar { a } \bar { f } + \bar { \ell } ) / ( \bar { \ell } - \bar { a } ) ; w ^ { * } = ( \bar { f } - \bar { \ell } ) / ( \bar { \ell } - \bar { a } )\)
• E) \(L ^ { * } = \frac { \bar { a } \bar { f } + \bar { \ell } } { \bar { \ell } + \bar { a } } ; w ^ { * } = \frac { \bar { f } - \bar { \ell } } { \bar { \ell } - \bar { a } }\)

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