In a particular industry, labor supply is ES=20+w and labor demand is E D=60-4w, where E is the employment level and w is the hourly wage.
a) What are the equilibrium wage and employment if the labor market is competitive?
b) What is the unemployment rate? [Help: the unemployment rate is defined as the number of unemployed workers divided by the labor force, that is, the number of employed plus the number of unemployed workers.]
c) Suppose the government sets a minimum hourly wage of $10. How many workers would lose their jobs? How many additional workers would want a job at the minimum wage? What is the unemployment rate?