One proposed policy is to implement a payroll subsid y of $16.36, paid directly to employers. The labor market demand is given by Ed = 1,058,800 - 9,600. w and the labor market supply is given by Es= 11,000.w- 33,000.
(1) Now calculate the "buyer" and "seller" wages and the new employment level under the policy, then graph this new equilibrium in a new fully-labeled figure, with all of the relevant "surplus areas" labeled with letters (A, B, C, and so on).
(2) Next use the areas labeled with letters to calculate the changes in employer surplus, worker surplus, and total surplus, along with government expenditures, dead weight loss, and the proportions of total surplus captured by employers and by workers due to this policy.