Solution :
Given the wage = $ 10.25 that is to be imposed to the market.
Given equation :
= 500 – 45W and
= -200 + 25W
If the wage of $10.25 is to be imposed to the market, the value of the labor supply can be found by putting the value of the wage in the labor supply equation.
At W = 10.25
Putting this value in the above equation, the labor supply would be
= -200 + 25W
= -200 + 25(10.25)
= 56.25
When W = 10.25, the value for the labor demand can be found by :
= 500 – 45W
= 500 – 45(10.25)
= 500 – 461.25
= 38.75
Therefore, the labor demand and the labor supply model is
= 400 - 45 x 10.25
= -200 + 25 x 10.25