The demand for labour can be expressed as Q = 10,000 - w and the supply of labour is Q = 5,000 + w where Q is total person- hours of work during the week and w is the weekly salary. How much compensation do the workers receive weekly?
A)28,125,000
B)43,750,000
C)15,625,000
D)18,750,000

Question

Quizplus · Accepted Answer

To find the equilibrium salary, we need to set the demand and supply equations equal to each other:

10,000 - w = 5,000 + w

Simplifying and solving for w, we get:

2w = 5,000

w = 2,500

This means that the equilibrium weekly salary is $2,500.

To find the total compensation that workers receive weekly, we can substitute this value back into either the demand or supply equation:

Q = 10,000 - w
Q = 10,000 - 2,500
Q = 7,500

This means that workers provide a total of 7,500 person-hours of work per week, and the total compensation they receive is:

Compensation = Q x w
Compensation = 7,500 x 2,500
Compensation = $18,750,000

Therefore, the answer is D.

The Demand for Labour Can Be Expressed as Q =