Exhibit 12-6
-If the market in Exhibit 12-6 is allowed to operate freely, total employment by the typical employer (illustrated in the right-hand panel) will be

Question

Exhibit 12-6 
-If the market in Exhibit 12-6 is allowed to operate freely, total employment by the typical employer (illustrated in the right-hand panel) will be

Quizplus · Accepted Answer

In a free market, the equilibrium wage will be at the point where the supply and demand curves intersect. In this case, that is $12 per hour and 120 workers. Each employer can only hire 10 workers, so there will be a total of 12 employers, each hiring 10 workers, which gives a total employment of 12 x 10 = 120 workers.

Exhibit 12-6 -If the Market in Exhibit 12-6 Is Allowed to Operate