At equilibrium, the quantity demanded of labor equals the quantity supplied. So we can set the labor demand equal to the labor supply and solve for w.
c - dw = a + bw
Rearrange the equation to solve for w:
bw - dw = a - c
Factor out w on the left side:
w(b - d) = a - c
Divide both sides of the equation by (b - d):
w = (a - c) / (b - d)
So, the equilibrium wage (w) is equal to (a - c) divided by (b - d).
Given labour demand=c-dw
Labour supply=a+bw
Determine equilibrium w
1 answer