(a) What are the endogenous variables in the labor market model? (b) Solve for the equilibrium values of these endogenous variables.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter16: Labor Markets
Section: Chapter Questions
Problem 16.12P
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5. The labor market model (I): Suppose the following
equations characterize supply and demand in the
labor market model:
labor supply: L³ = 2 × w + 30
labor demand: Lª = 60 – w
Equilibrium occurs at an employment level L* and a
wage w*, so that the labor market clears. That is,
supply is equal to demand: L'= Lª
(a) What are the endogenous variables in the labor
market model?
(b) Solve for the equilibrium values of these
endogenous variables.
Transcribed Image Text:* 5. The labor market model (I): Suppose the following equations characterize supply and demand in the labor market model: labor supply: L³ = 2 × w + 30 labor demand: Lª = 60 – w Equilibrium occurs at an employment level L* and a wage w*, so that the labor market clears. That is, supply is equal to demand: L'= Lª (a) What are the endogenous variables in the labor market model? (b) Solve for the equilibrium values of these endogenous variables.
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