Table 4-4

Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-4.Suppose that the quantity of labor supplied increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Question

Table 4-4
  
Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-4.Suppose that the quantity of labor supplied increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Quizplus · Accepted Answer

Initially, the equilibrium wage and quantity of labor were $10 and 570,000, respectively. With a 40,000 increase in the quantity of labor supplied at each wage level, the supply curve shifts rightward. This results in a decrease in the equilibrium wage and an increase in the equilibrium quantity of labor. The new equilibrium wage is $9.50, and the new equilibrium quantity of labor is 610,000, which is closest to option C.

Table 4-4 Table 4-4 Shows the Demand and Supply Schedules for the and Supply