Eco Homework Help Please!?

Question

Demand and supply conditions in the perfect competitve market for unskilled labor are as follows:

Qd = 120 - 20P (demand)

Qs = 10P (supply)

Where Q is millions of hours of unskilled labor, and P is the wage rate per hour.

a. Graph the indusrty demand and supply curves.

b. Determine the industry equilibrium price/output combinations both graphically and algebraically.

c. Calculate the level of excess supply (unemployment) if the minimum wage is set at $4.50 per hour.

Answer 1

A:

http://upload.wikimedia.org/wikipedia/en...

http://ingrimayne.com/econ/AllocatingRat...

http://img.sparknotes.com/figures/0/039b...

http://livingeconomics.org/images/glossa...

B:

Current equilibrium:

120-20P=10P

30P=120

P=$4.00

Q=40

C:

P=$4.50

Qd=120-20*4.5=30

Qs=10*4.5=45

Excess supply=45-30=15 millions of hours of unskilled labor.

Answer 2

a) a line starting at zero with a slope of 10 and a line starting at 120 with a slope of -20

b) set supply and demand equal

120-20P=10P

120=30P

P=4

to determine quantity, put the price into the supply equation

10(4)=40

c) 120-20(4.5)=30

10(4.5)=45

supply - demand =

45-30=15