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Assume demand and supply conditions in the competitive market for unskilled labor are as follows:
P= $15 - 0.3QD (Demand)
P= $0.2QS (Supply)
where Q is millions of hours of unskilled labor and P is the wage rate per hour.
A. Illustrate the industry equilibrium wage/employment combination both graphically and algebraically.
B. Calculate the level of excess supply (unemployment) if the Federal minimum wage is raised from $5.15 to $6 per hour.
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