In the labor market, the market demand for labor is described by the equation Qd / l = 100 – 2w

In the labor market, the market demand for labor is described by the equation Qd / l = 100 – 2w, and the market supply of labor is described by the equation Qs / l = 40 + 4w /. A. Find the parameters of equilibrium B. The union is seeking to raise the wage rate at the level of 15 thousand rubles. Describe the consequences of the victory of trade unions quantitatively and qualitatively.

A. Let us find the equilibrium wage rate and the equilibrium number of employees by equating the demand for labor and supply:

100 – 2w = 40 + 4w;

6w = 60;

w = 10 thousand rubles.

Let’s find the equilibrium number of employees:

L = 100 – 2 * 10 = 80 thousand employees.

B. If the wages are set at the level of 15 thousand rubles, then we find the demand for labor and its supply:

Qd / l = 100 – 2 * 15 = 70 thousand employees.

Qs / l = 40 + 4 * 15 = 100 thousand employees.

That is, there will be a surplus of labor on the market (100 – 70 = 30 thousand employees). Consequently, unemployment will arise, since the supply of labor exceeds the demand for it.