The market for labour can be described by two linear equations. Demand is given by P = 170 - (1/6)Q, and supply is given by P = 50 + (1/3)Q, where Q is the quantity of labour and P is the price of labour - the wage rate
(a) Graph the functions and find the equilibrium price and quantity by equating demand and supply
(b) Suppose a price ceiling is established by the government at a price of $120. This price is below the equilibrium price that you have obtained in part a. Calculate the amount that would be demanded and supplied and then calculate the excess demand.