Answered: A firms labor demand and labor supply…

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Unemployment

Section: Chapter Questions

Problem 4CQQ

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A firms labor demand and labor supply equations are shown below.

Labor demand equation: Ld = 40- 2(w)

Labor supply equation: Ls = 20 + 3(w), where w is the wage per hour worked.

Instructions: Round your answers to the nearest whole number.

a. The equilibrium wage is $______ and the equilibrium quantity of labor employed is______ people.

b. The workers, thinking that their wages are too low, decide to strike. After tense negotiations, the firm decides to raise the wage by 50 percent. After the wage increase, ______ people are unemployed.

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