What is the new wage and employment level

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Reference no: EM13155019

Suppose the Demand for Labor for a given occupation is given by, W=50-3E, and the Supply of Labor is given by W=10+5E, where W=wages, and E=employment (measured in thousands of workers).

a. Find the equilibrium wage and employment level.

b. Suppose a tax of $8 is imposed on employers. What is the new equilibrium wage and employment level? What is the tax burden born by the employees and the tax burden born by the employers? What is the government tax revenue? c. Suppose instead, that the tax of $8 in part b). constitutes the cost to the employer of providing health insurance, whereas the value to the employees of having health insurance is $10. Will health insurance be provided in this case? Please explain. If not offered, what is the new wage and employment level? If offered, what is the new wage and employment level; are employees better or worse off as a result of the health insurance benefits?

d. If the cost to employers is $8 and the value to employees is $10 as above, what is the highest minimum wage that can be exist in this labor market and still have employers offering health insurance? Please explain.

Reference no: EM13155019

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