Suppose the following equations characterize supply and demand in the labor market model: labor supply: L s
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Suppose the following equations characterize supply and demand in the labor market model:
labor supply: Ls = 2 × w + 30
labor demand: Ld = 60 − w
Equilibrium occurs at an employment level L* and a wage w*, so that the labor market clears. That is, supply is equal to demand: Ls = Ld.
(a) What are the endogenous variables in the labor market model?
(b) Solve for the equilibrium values of these endogenous variables.
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