Labor supply is given by w=10+2Ls Labor demand is given by w= 100-Ld. The city i

Question

Labor supply is given by w=10+2Ls

Labor demand is given by w= 100-Ld.

The city imposes an environmental tax of $10 per unit of labor on firms. As a result, companies will now lower their willingness to pay for labor by $10 per worker.

The city uses the money to beautify the local park, which attracts many workers to the city. An economic consultant firm finds out the labor supply curve will shift because workers will be happy with a wage that is $16 lower than before the improvement.

Calculate the wage and the number of jobs. 

Explanation / Answer

New labor supply is w= -6 +2 L New labor demand is w= 90 -L Equate the two and we have -6 +2L =90- L 3L =96 L= 32 w= 90-32 = 58

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