A firm’s labor demand and labor supply equations are shown below.
Labor demand equation: Ld = 40 – 2(w)
Labor supply equation: Ls = −20 + 3(w),
where w is the wage per hour worked.
Instructions: Round your answers to the nearest whole number.
a. The equilibrium wage is $? and the equilibrium quantity of labor employed is ? people.
b. The workers, thinking that their wages are too low, decide to strike. After tense negotiations, the firm decides to raise the wage by 50 percent.
After the wage increase? people are unemployed