In a particular labor market, the demand for labor is given by W = 20 - (1 / 100)L, and the supply of labor is given by W = 4 + (1 / 100)L, where W is the wage rate and L is the number of workers. The equilibrium wage is _____, and the equilibrium number of workers is _____.
A)$10; 1,000
B)$12; 800
C)$8; 1,200
D)$20; 1,000

Question

Quizplus · Accepted Answer

To find the equilibrium wage and number of workers, we need to set the demand and supply equations equal to each other and solve for L (number of workers) and W (wage rate).

20 - (1/100)L = 4 + (1/100)L

Subtracting 4 and adding (1/100)L to both sides, we get:

16 = (2/100)L

Multiplying both sides by 100/2, we get:

L = 800

Now that we have L, we can substitute it into either the demand or supply equation to find W:

W = 20 - (1/100)L = 20 - (1/100) x 800 = $12

Therefore, the equilibrium wage is $12 and the equilibrium number of workers is 800. The best choice is B.

In a Particular Labor Market, the Demand for Labor Is