Purchase Solution

equilibrium levels of W and L in this labor market

Not what you're looking for?

Ask Custom Question

Suppose that the demand for labor by firms is given by L = 1000 - 100W and the supply of labor from workers is given by L = -400 + 100W, where L represents the number of workers and W is the wage in this labor market.

a. What are the equilibrium levels of W and L in this labor market?

b. Suppose the government imposes an income tx of 25% on workers. The workers after tax wage, W(w), will then be equal to the wage paid by firms, W(), times (1-t). What will the new equilibrium levels for W(f), W(w), and L be in this labor market?

c. What is the government's tax revenue and the deadweight loss from the income tax?

Purchase this Solution
Solution Summary

The equilibrium levels of W and L in this labor market are found. The wage in the labor market of functions are discussed. The deadweight loss from the income tax are given.

Solution Preview

a. What are the equilibrium levels of W and L in this labor market?
At the equilibrium, Ls=Ld at the same level of W:
Then combine both equations:
1000-100W=-400 + 100W
solve for W* =7
and L* =1000 - ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Find the equilibrium labor quantity demanded

    The supply of labor in the convenience store industry is given by given by: L = 8 + 2w^2 where L is the labor supply per day and w is the wage rate.

  • Equlibrium Level of Output in Given Market

    Using this information and assuming there are 5 firms in this market, determine the equilibrium level of output in this market, the equilibrium price paid by consumers in this market, the profits to the industry, and the amount of labor used by the industry

  • Substitution and Output Effects on Labor

    Then determine the substitution and output effects on labor of the wage For equilibrium in product market demand = supply calculate P and Q. 13,200-0.8Q=258.18+0.18Q Which gives Q=13,205.93 and price=2635.25 From equilibrium in labor market demand

  • Production function and equilibrium output

    This will be determined from the market equilibrium in product market and labor market.

  • demand and supply curves

    , find the amount of labor that minimizes total cost of production Total cost of production is minimized when W = MPR = MR*MP or W = P*MP (in a competitive market).

  • Number of Labor

    152651 Labor/ Wage Equilibrium Acme is the sole supplier of security systems in the product market and sole employer of locksmiths in the labor market. The demand curve for security systems is given by P = 100 - Q.

  • Derivation of IS and LM equations

    The labor supply curve is NS = 55 + 10(1 - t)w, where NS is the amount of labor supplied, w is the real wage, and t is the tax rate on wage income, which is 0.5.

  • Cobb-Douglas production function


    The labor demand is given by taking the partial derivative of Y with respect to L (= dY/dL)
    This also gives the labor wage in terms of units of output (W/P)
    W/P = dY/dL = (2/3)* K^(1/3)* L^-(1/3) = (2/3)* K^(1/3)/L^(1/3) ---- (a)

  • total profit of the firm

    b) What would be the outcome if LuthorCorp behaves as a competitive firm in the market for anti-virus programs, but remained an oligopoly purchaser of labor? Once again, solve for Q, L, w, P, PI, and CS.

View More Related Solutions