Suppose all workers in a certain labor market are of either high quality or low quality.Potential employers value a high-quality worker at $15,000 per month and a low-quality worker at $7,500 per month.The monthly supply of high-quality workers is Q^s_H = 0.04(W - 1,500)and the supply of low-quality workers is Q^s_L = 0.08(W - 1,500),where W is the monthly wage.If workers' abilities are observable to employers,how many workers of each type do employers hire? A) Q_H = 440; Q_L = 440 B) Q_H = 540; Q_L = 480 C) Q_H = 440; Q_L = 880 D) Q_H = 270; Q_L = 240

Question

Quizplus · Accepted Answer

To determine the number of workers of each type that employers hire, we need to find the intersection point of the demand and supply curves.

The monthly demand for high-quality workers is QD1U1B1HS1U1B0 = 1,000 - 0.02W, and the monthly demand for low-quality workers is QD1U1B1LS1U1B0 = 1,000 - 0.04W.

Setting each demand equation equal to the respective supply equation, we get:

0.04(W - 1,500) = 1,000 - 0.02W for high-quality workers
0.08(W - 1,500) = 1,000 - 0.04W for low-quality workers

Solving for W in each equation:

W = 24,000 for high-quality workers
W = 10,000 for low-quality workers

Plugging in these values of W into the supply equations, we get:

QS1U1B1HS1U1B0 = 440
QS1U1B1LS1U1B0 = 480

Therefore, the answer is B: QS1U1B1HS1U1B0 = 540; QS1U1B1LS1U1B0 = 480.

Suppose All Workers in a Certain Labor Market Are of Either