Let L denote the level of employment (measured in thousands of worker hours), an

ID: 1238935 • Letter: L

Question

Let L denote the level of employment (measured in thousands of worker hours), and W the hourly wage.
Suppose that the supply of labor is given by LS=10+2W and that the demand for labor is LD=40-W.
Calculate the equilibrium wage and level of employment.
a. What would happen if a union imposed a wage floor of $20 per hour?
b. Ignoring part (a), what would happen if there was a sudden increase in the demand for labor? More
specifically, suppose that at each wage, employers demand 15,000 more worker hours.

Explanation / Answer

Equilibriumwage W => 10+2w = 40-w ==>w =30 a.High budget problems b.Inflation occurs

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Let L denote the level of employment (measured in thousands of worker hours), an

Let L represent the number of workers hired by a firm, and let Q represent that

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Let L denote the level of employment (measured in thousands of worker hours), an

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