Question

Topic: Labor Economics. Need solution for tasks 4 4.1 4.2 4.3

Answer 1

The curves of the labor market are illustrations of demand and supply, and the curves are all linear functions

4.1: The graph of the curves of the labor market

The equations are given as:

D = 36 - 2W

S₁ = 9 + W ---- domestic (i.e. without immigrants)

S₂ = 10 + 2W ---- total (i.e. including immigrants)

See attachment for the graph

4.2: The equilibrium wage rate before immigration

This is the point of intersection between the curves of S₁ and D.

From the graph, we have:

(W, D) = (9,18)

Hence, the equilibrium wage rate before immigration is $9, and the number of workers that would be hired is 18

4.3: The equilibrium wage rate after immigration

This is the point of intersection between the curves of S₂ and D.

From the graph, we have:

(W, D) = (6.5,23)

Hence, the equilibrium wage rate after immigration is $6.5, and the number of workers that would be hired is 23

4.3.1: Number of domestic workers hired

Substitute 6.5 for W in S₁ = 9 + W

S₁ = 9 + 6.5

S₁ = 15.5

Remove decimal

S₁ = 16

Hence, the number of domestic workers that would be hired is 16

4.3.1: Number of immigrants hired

Substitute 6.5 for W in S₂ = 10 + 2W

S₂ = 10 + 2 * 6.5

S₂ = 23

Subtract S₁ = 16 from S₂ = 23

Immigrants = 23 - 16

Immigrants = 7

Hence, the number of immigrants that would be hired is 7

Read more about demand and supply at:

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