Question

In a particular labor market, the demand for labor is given by W = 20 – (1 / 100)L, and the supply of labor is given by W = 4 + (1 / 100)L, where W is the wage rate and L is the number of workers. The equilibrium wage is _____, and the equilibrium number of workers is _____. $10; 1,000 $12; 800 $20; 1,000 $8; 1,200

Answer 1

Answer:

Equilibrium wage is $12

Equilibrium number of workers is: 800

Explanation:

Because in equilibrium, the price in this case, wage should be the same for the demand and for the supply you can equal both equations:

w=20-(1/100)L ; w=4+(1/100)L

20-(1/100)L=4+(1/100)L

Then, you should get L by algebra:

L(-1/100-1/100)=4-20

L(-2/100)=-16

L=1600/2

L=800

The equilibrium number of workers is 800

Then you replace this answer in either the supply or demand equation:

w=4+(1/100)*800

w=4+8

w=12

The equilibrium wage is: $12