Answer to Question #70437 in Microeconomics for Gabriel Vargas

Question

Suppose that the market for unskilled labour is a competitive market and can be described as by the following demand and supply curves:
D= 60,000-5,000W
S= 5,000W-35,000
W is wage rate per hour for labour, D and S are demand and supply for unskilled labour, both measured in hours.

Calculate the equilibrium rate and quantity of labour employed and draw a diagram to illustrate your answer

Answer 1

60000-5000w =5000w – 35000
10000w = 95000
w = 9.5
D=S=12500