What is the current equilibrium quantity of labor

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Consider the following:

 

Weekly wage rate           Quantity of labor            Quantity of labor

 

                                             demanded by firms       supplied by workers

 

               $500                                    8,000                                  26,000

 

               $450                                    12,000                                 24,000

 

               $400                                    16,000                                 22,000

 

               $350                                    20,000                                 20,000

 

               $300                                    24,000                                 18,000

 

               $250                                    28,000                                 16,000

 

               $200                                    30,000                                 14,000

 

 

a. What is the current equilibrium quantity of labor? What is the current market rate?

 

Suppose that two events occur:

 

(i) Opportunities to work abroad induce 4,000 domestic residents to move to foreign labor markets, irrespective of domestic wages, and

 

(ii) increase demand for the products of domestic firms induce them to offer to hire 2,000 more workers each week at any given wage rate.

 

b. What is the new equilibrium quantity of labor? What is the new market rate?

Reference no: EM133080901

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