Table 4-7
Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7. Suppose that the quantity of labor supplied decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $8.50; Q = 550,000
B) W = $12.50; Q = 550,000
C) W = $8.50; Q = 630,000
D) W = $11.50; Q = 610,000

Question

Table 4-7
  Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley.
-Refer to Table 4-7. Suppose that the quantity of labor supplied decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $8.50; Q = 550,000 
B) W = $12.50; Q = 550,000 
C) W = $8.50; Q = 630,000 
D) W = $11.50; Q = 610,000

Quizplus · Accepted Answer

When the quantity of labor supplied decreases by 80,000 at each wage level, the new equilibrium is found where the new supply equals demand. At a wage of $12.50, the adjusted supply equals the demand, resulting in an equilibrium quantity of 550,000.

Table 4-7 Table 4-7 Shows the Demand and Supply Schedules