In market 1, the demand for labour is w₁= 100 - z₁, where w₁is the wage rate and z₁is the number of workers. Similarly, in market 2 the demand for labour is w₂= 100 - z₂. There are 100 workers to be allocated to the two markets, and workers are concerned only with their expected wage. If the two labour markets are competitive, then in equilibrium workers are allocated to the two markets in which of the following ways? A)60 workers to market 1 and 40 to market 2 B)70 workers to market 1 and 30 to market 2 C)50 workers to market 1 and 50 to market 2 D)40 workers to market 1 and 60 to market 2

Question

Quizplus · Accepted Answer

In competitive labor markets, workers will distribute themselves between the two markets until the wage rates are equalized. Given the demand functions for labor in both markets are identical (w = 100 - z), equilibrium is achieved when the number of workers (z) is the same in both markets, leading to an equal distribution of 50 workers in each market.

In Market 1, the Demand for Labour Is W1 =

In Market 1, the Demand for Labour Is W₁=