$$\begin{array} { c c c }
\begin{array} { c }
\text { Real wage rate Quantity of labor demanded } \
\text { (2005 dollars } \
\text { (millions of hours } \
\text { per hour) }
\end{array} & \begin{array} { c }
\text { Quantity of labor supplied } \
\text { (millions of hours } \
\text { per month) }
\end{array} \
\hline 7.15 & 90 & 25 \
7.65 & 70 & 32 \
8.00 & 60 & 60 \
8.50 & 45 & 70 \
9.00 & 20 & 85 \
\hline
\end{array}$$
-The table above gives the labor market for a small foreign economy.Equilibrium in the labor market occurs at a real wage rate of

Question

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Real wage rate Quantity of labor demanded } \
\text { (2005 dollars } \
\text { (millions of hours } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor supplied } \
\text { (millions of hours } \
\text { per month) }
\end{array} \
\hline 7.15 & 90 & 25 \
7.65 & 70 & 32 \
8.00 & 60 & 60 \
8.50 & 45 & 70 \
9.00 & 20 & 85 \
\hline
\end{array}$$
-The table above gives the labor market for a small foreign economy.Equilibrium in the labor market occurs at a real wage rate of

Quizplus · Accepted Answer

Equilibrium in the labor market occurs where the quantity of labor demanded equals the quantity of labor supplied. From the table, we see that at a real wage rate of $8.00 per hour, the quantity of labor demanded is 60 million hours and the quantity of labor supplied is also 60 million hours. Therefore, this is the equilibrium real wage rate. At any other real wage rate, either the quantity of labor demanded will exceed the quantity of labor supplied (resulting in a labor shortage) or the quantity of labor supplied will exceed the quantity of labor demanded (resulting in a labor surplus).

-The Table Above Gives the Labor Market for a Small