A) To determine the equilibrium wage (w), we need to set the labour demand equal to the labour supply:
c - d(w) = a + b(w)
Next, we will solve for w:
c - a = (b + d)w
w = (c - a)/(b + d)
B) If a worker derives a benefit k from a government mandate to increase the wage by t, the new labour demand would be:
Labour demand = c - d(w + t)
Labour supply = a + b(w + k)
To find the new wage (new w), we set the new labour demand equal to the labour supply:
c - d(w + t) = a + b(w + k)
Next, we solve for new w:
c - a = (b + d)w + (bk - dt)
new w = (c - a - bk + dt)/(b + d)
B) If k = 0, meaning there is no benefit for workers, the labour supply would be:
Labour supply = a + b(w + 0) = a + bw
In this case, the effect on the labour supply side (i.e., on workers) is that there is no additional benefit or increase in the wage caused by a government mandate.
Given labour demand=c-dw
Labour supply=a+bw
A)determine equilibrium w
B)assume that a worker derive a benefit k in monetary value from government mandate to increase w by t
Labour demand=c-d(w+t)
Labour supply=a+b(w+k) find a)new w
b)what is the effect of k=0 on labour supply side (i,e:on workers)
1 answer