Use the following to answer questions:
-(Figure: The Labour Market)Use Figure: The Labour Market.What is the unemployment rate at an efficiency wage of $16,assuming all workers without a job are searching?
A) 10%
B) 20%
C) 27%
D) 73%

Question

Use the following to answer questions: 
-(Figure: The Labour Market)Use Figure: The Labour Market.What is the unemployment rate at an efficiency wage of $16,assuming all workers without a job are searching?
A) 10% 
B) 20% 
C) 27% 
D) 73%

Quizplus · Accepted Answer

At an efficiency wage of $16, the number of unemployed workers is equal to the difference between the quantity of labor supplied and the quantity of labor demanded, which is 27. The unemployment rate is the ratio of the number of unemployed workers to the total labor force, which is the sum of the employed and unemployed workers. At this efficiency wage, the labor force is 100, so the unemployment rate is (27/100) x 100%, which is 27%. Therefore, the correct answer is C.

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