Calculate the deadweight loss from the minimum wage

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Reference no: EM131109548

Suppose the demand for labor market is given by L = 408−2w and the market supply is given by L = 10w.

a. In a graph draw the supply and demand curves and find the equilibrium wage and amount of employment. Show the seller’s and consumer’s surplus.

b. Suppose a minimum wage is placed on wages that sets the wage at $50. Find the quantity demanded and supplied, and the amount of unemployment.

c. Calculate the deadweight loss from the minimum wage.

Reference no: EM131109548

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