Michigan economy is in equilibrium with no unemployment

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Suppose that, initially, the Michigan economy is in equilibrium with no unemployment. The supply of workers is ES = -1,000,000 + 200w, and the demand for workers is ED = 16,500,000 – 300w, where w = annual wages, and E = number of employed workers. Then, structural unemployment arises because the demand for labor falls in Illinois but wages there are inflexible downward and no one moves out of state. If labor demand falls to ED = 15,000,000 – 300w, how many workers will be unemployed in Illinois? What will be its unemployment rate?

Reference no: EM13733580

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