The quantity supplied and demanded of labor in the country of Shoppingland is shown in the table below. Draw two supply and demand diagrams for the labor market, assuming that wages are sticky downward. In the first diagram, show how a boom in sales that leads to an increase of 60 in the quantity of labor demanded at every level of wages will affect quantity supplied, quantity demanded, and the wage. In the second diagram, show how a drop in sales that leads to a drop of 50 in the quantity of labor demanded (from the original labor demand curve) will affect the quantity of labor supplied, quantity of labor demanded, and the wage.
Hourly Pay 16 , 18 , 20 , 22 , 24 , 26
Quantity Supplied 240 , 270 , 300 , 320 , 340 , 360
Quantity Demanded 340 , 320 , 300 , 290 , 280 , 270