P10.3 Perfectly Competitive Equilibrium. Demand and supply conditions in the perfectly com-… 1 answer below »

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P10.3 Perfectly Competitive Equilibrium. Demand and supply conditions in the perfectly com- petitive market for unskilled labor are as follows:

 

QD   =  150  –  16P                (Demand)

QS   =  8P                               (Supply)

where Q is millions of hours of unskilled labor and P is the wage rate per hour.

A.   Graph the industry demand and supply curves.

B.    Determine the industry equilibrium price/output combination both graphically and alge- braically.

C.    Calculate the level of excess supply (unemployment) if the minimum wage is set at $7 per hour.