Suppose the labour market in the house cleaning industry in Quebec City can be described by the following demand and supply equations: LD = 400 - 10w and LS = 40 + 20w.
a) Calculate the equilibrium wage and employment if the market is free.
b) Suppose the Cleaners’ Union, of which all cleaning workers must be members, requires that employers provide workers with high-tech protection equipment, which increases the employers’ cost of labour by approximately $2 per hour. However, most workers think that this equipment is not necessary, because their regular, inexpensive outfit does about the same job. Calculate the equilibrium wage and employment under the new equipment requirement.
c) Draw a graph to show the effect of the requirement.