Answer:
D) wage = $8.50 and quantity = 550,000
Explanation:
hourly wage labor supplied labor demanded -80,000
$7.50 530,000 650,000 570,000
<u>$8.50</u> <u> 550,000</u> 630,000 <u>550,000</u>
$9.50 570,000 610,000 530,000
$10.50 590,000 590,000 510,000
$11.50 610,000 570,000 490,000
$12.50 630,000 550,000 470,000
The equilibrium quantity is the point where the labor supplied and the labor demanded intersect, and in this case that point is located at 550,000 units of labor at a price (wage) of $8.50 per labor hour.
Answer: A) supply increases and demand stays the same
Check out the diagram below. The curves S1 and D1 are the original supply and demand curves for some product. If we shift S1 to the right, we get some new curve S2. This is increasing supply. Keeping D1 the same means that the equilibrium price slides down and the quantity goes up.
In short, we have more stuff in the market, and each of those items is cheaper.
