Predict wages and employment

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Predict Wages and Employment

In the city of Growville, the equilibrium employment is 100,000 workers and the equilibrium wage is $100 per day. The wage elasticity of demand for labor is -1.0 and the wage elasticity of supply of labor is 5.0. Suppose the demand for labor increases by 18 percent. Illustrate the effects of the increase in labor demand on the urban labor market, including values for the equilibrium wage and equilibrium total employment.

Reference no: EM132401234

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