Suppose that the supply curve for optometrists is given by L s = -6 + 0.6W, while
Question:
Suppose that the supply curve for optometrists is given by Ls = -6 + 0.6W, while the demand curve is given by LD = 50 - W, where W = annual earnings in thousands of dollars per year and L = thousands of optometrists.
a. Find the equilibrium wage and employment levels.
b. Now, suppose that the demand for optometrists increases and the new demand curve is Assume that this market is subject to cobwebs because it takes about three years to produce people who specialize in optometry. While this adjustment is taking place, the short-run supply of optometrists is fixed. Calculate the wage and employment levels in each of the first three rounds, and find the new long-run equilibrium. Draw a graph to show these events.
Step by Step Answer:
Modern Labor Economics Theory And Public Policy
ISBN: 9780132540643
11th Edition
Authors: Ronald Ehrenberg, Robert Smith