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 - 20(w). The labour supply curve is QS = 400 + 40(w). What is the equilibrium level of employment?

Question

Quizplus · Accepted Answer

The equilibrium level of employment occurs where labour demand equals labour supply. Setting QD equal to QS and solving for w gives us:
1000 - 20(w) = 400 + 40(w)
600 = 60(w)
w = 10
Substituting w = 10 into either the demand or supply equation gives us the equilibrium level of employment:
QD = 1000 - 20(10) = 800
QS = 400 + 40(10) = 800. Therefore, the equilibrium level of employment is 800.

Suppose There Is a Competitive Market for Retail Workers at a Large