The supply and demand for Mandarin-English translators is given by Supply: L = 1
ID: 1247742 • Letter: T
Question
The supply and demand for Mandarin-English translators is given bySupply: L = 150
Demand : L=200 - 5w, where L denotes level of employment and w denotes wages. The supply and demand for Cantonese-English translators is given by
Supply: L = 200
Demand : L=400 - 10w
Calculate the level of employment and wages without government intervention. Now supposing that the government enforces a $15 wage for both, what will be the employment and supply/demand levels for both?
**I'm a bit stumped on this question. Do I go 150 = 200 - 5w, where w = 10 for Mandarin and w = 20 for Cantonese? I got L = 150 for Mandarin and L = 200 for Cantonese. Thanks in advance for your help.
Explanation / Answer
You start off by solving w as you did and correctly get w = 10 for Man-Eng and w=20 for Can-Eng. The supply level without government is then: L(Man-Eng) + L(Can-Eng) since both cases they match demand the employment level will be: 150+200 = 350 Now that government intervenes the new levels will be: Demand for Man-Eng: 200-5*15 = 125 Demand for Can-Eng: 400-10*15 = 250 But since supply of Can-Eng is restricted to 200 L for Can-Eng is equal to 200 (max employment) For Man-Eng the demand is 125 but supply is 150 so for it to be in equilibrium 25 will have to be laid off therefore L=125 Adding the two L's together we get the new employment level: 200+125 = 325.
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