The labor supply is ES = 6w - 4 and the labor demand is ED = 52? 2w, where E is the level of employment and w is the hourly wage in a particular industry.
1. Determine the equilibrium wage and the employment if the labor market is competitive? Find out the unemployment rate?
2. Assume the government sets a minimum hourly wage of $10. Determine how many workers would lose their jobs? Calculate how many additional workers would want a job at the minimum wage? What is the unemployment rate?