Question

The demand for labor by an industry is given buy the curve L=900−20w, where L is the labor demanded per day and w is the wage rate. The supply curve is given by L=−100+20w.

a = what is the wage rateand quantity of labor hired ?
b. What is the economic rent earned by workers?

Answer 1

The wage rate is $50 and no labor is hired.

Step-by-step explanation:

The wage rate and quantity of labor hired in this scenario can be found by setting the supply equation equal to the demand equation and solving for w.

First, we equate the two equations: 900 - 20w = -100 + 20w

Simplifying this equation, we get: w = $50

Plugging the value of w back into either the demand or supply equation, we can find the quantity of labor hired. For example, if we use the demand equation: L = 900 - 20($50), the quantity of labor hired will be L = 900 - 1000 = -100. However, since negative labor doesn't make sense, we can conclude that there is no labor hired in this scenario.