Posted by **Kathy** on Tuesday, May 26, 2009 at 5:24am.

Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. The government has passed a law that subsidizes wages by $1 per hour. The equilibrium wage and quantity of labor with the subsidy is?

$4 and 15 workers respectively.

$2.5 and 12.5 workers respectively.

$3.5 and 17.5 workers respectively.

$3.5 and 10 workers respectively.

- Microeconomics -
**economyst**, Tuesday, May 26, 2009 at 9:47am
To solve, I rewrote the supply and demand equations as W=f(Q). So: Ws = Qs/5 and Wd = 6 - Q/5. (So far, this is just algebra)

Now then, the $1 per worker subsidy has the effect of lowering the supply equation by $1 for all levels.

So, Ws' = Qs/5 - 1. Now set supply = demand and solve for Q.

That is Q/5-1 = 6-Q/5

Take it from here

## Answer This Question

## Related Questions

- Microeconomics - The labor demand curve of a purely competitive seller: What ...
- More Economics - I have an lazy instructor using test bank questions unrelated ...
- Economics - Suppose that a perfectly competitive market is described by the ...
- economics - šPlease explain these question in words! š How will demand and ...
- Econ. - In recent years, some policymakers have proposed requiring firms to give...
- ECONOMICS - 1) If the price of a product produced in a competitive market ...
- ECONOMICS - PLEASE HELP ME WITH THESE!!!!!!!! 1) If the price of a product ...
- microeconomics - Many factors determine the supply and demand for labor. ...
- More Economics - I have an lazy instructor using test bank questions unrelated ...
- Economics - Describe two factors that affect labor supply and two factors that ...

More Related Questions