Predict new equilibrium values for wage and total employment


In the city of Gainesville, equilibrium employment is 100,000 workers, and the equilibrium wage is $100 per day. The elasticity of demand for labor is 2.0 (in absolute value) and the elasticity of supply of labor is 3.0. The employment multiplier is 2.5. Suppose the demand for export labor increases by 10,000 jobs. Predict the new equilibrium values for the wage and total employment. Illustrate your answer with a graph.

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Microeconomics: Predict new equilibrium values for wage and total employment
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