The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company.
FIGURE 14-4
-Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20w). The labour supply curve is QS = 400 + 40w). What is the equilibrium level of employment?

Question

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company.
  FIGURE 14-4
-Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20w). The labour supply curve is QS = 400 + 40w). What is the equilibrium level of employment?

Quizplus · Accepted Answer

To find the equilibrium level of employment, we need to find where the labour demand curve intersects with the labour supply curve. 
Setting the two equations equal to each other: 
1000 - 20w = 400 + 40w 
Solving for w: 
600 = 60w 
w = 10 
Substituting this value back into either the labour demand or supply equation to find the equilibrium level of employment: 
Q = 1000 - 20(10) = 800 
Therefore, the equilibrium level of employment is 800.

The Diagram Below Shows the Supply and Demand for Labour