Calculating the perfectly competitive equilibrium

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Reference no: EM13967363

Perfectly Competitive Equilibrium

Demand and supply conditions in the perfectly com- petitive market for unskilled labor are as follows:

QD = 150 - 16P (Demand)

QS = 8P (Supply)

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

A. Graph the industry demand and supply curves.

B. Determine the industry equilibrium price/output combination both graphically and alge- braically.

C. Calculate the level of excess supply (unemployment) if the minimum wage is set at $7 per hour.

Reference no: EM13967363

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