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Find the equilibrium labor quantity demanded

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Madison has many residents and therefore, there are many convenience stores located in Madison so that residents can get their shopping done quickly. Assume that currently there are 34 identical convenience stores in Madison and the convenience store industry is operating in a perfectly competitive market such that the convenience store industry faces the demand for labor given by the following market labor demand equation:

L = 200 - w^2

where L is the labor demand and w is the wage rate that workers receive per day working at the convenience store.

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.

Furthermore, assume that UW Madison Badger Market located in Ingraham Hall is one of the convenience stores that operates in this perfectly competitive industry. What is the equilibrium quantity of labor hired by the Badger Market located in Ingraham Hall? (Base your answer only on the positive wage rate)

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Solution Summary

Solution depicts the steps to determine the equilibrium quantity demanded by a typical firm in the competitive market.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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