Assume labor is perfectly mobile between industries

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Assume that there are only 2 industries: cars and machinery. Assume that there are 500 workers. Labor demand in the car industry can be described as L=500-w and labor demand in the machinery industry can be defined by L=400-w. Assume labor is perfectly mobile between industries, but the single other factor, capital, is not mobile between industries (fixed). Assume that there is no unemployment.

a) In this problem, the equilibrium wage is ________.

b) and the number of equilibrium workers is _______.

c) The total returns to capital in the machinery industry is ________.

d) In this problem, if the demand in the machinery industry increases to L = 500 - w, the CHANGE in labor employment in the machinery industry is _________.

Reference no: EM133235632

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