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equilibrium wage? Question 6 1 points Save Answer Consider the following labor market Labor demand: Lap-...

equilibrium wage?

Question 6 1 points Save Answer Consider the following labor market Labor demand: Lap- w Labor supply: LS as 2w where w is th

Question 6 1 points Save Answer Consider the following labor market Labor demand: Lap- w Labor supply: LS as 2w where w is the wage, Lis the number of workers, ap and as are constants Now suppose that business owners predict low sales next year so they reduce hiring and as a result, ap-70,0000 and as10,000. But in this scenario wages are totally rigid and cannot adjust this year from its orig level (i.e. when ap=100,000 and as10,000): find the equi ibrium wage, given this setting. w*30,000 Ow20,000 Ow50,000 O w-15,000
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Answer #1

Initially the market has

Ld = 100000 - w and Ls = 10000 + 2w

This gives

100000 - w = 10000 + 2w

w* = 90000/3 = $30000

It is given that the equilibrium wage will remain unchanged in both cases. Select the first option, wage = $30,000.

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