Assignment task: Demand and supply curves can be represented with equations. Suppose that the demand for low-skilled labor QD, is represented by the following equation, where W is the wage rate and the constants are expressed in millions: QD = 56 -3W
The supply of low-skilled labor Qs is represented by the equation:
Qs = -10+8W
Find the equilibrium wage. Explain your answer.
Find the equilibrium quantity of labor. Explain your answer.
What happens if the minimum wage is $10? Does this minimum wage cause a surplus or a shortage? Explain your answer.
What happens if the minimum wage is $5? Does this minimum wage cause a surplus or a shortage? Explain your answer.