A firm’s labor demand and labor supply equations are shown below.
Labor demand equation: Ld = 70 – 6(w)
Labor supply equation: Ls = -20 + 12(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 20 percent.
After the wage increase,______ people are unemployed.