Question: Consider a perfectly competitive labour market, Labour Demand is given by LD = 150 5W, and Labour Supply is given by LS = 1ow,

Consider a perfectly competitive labour market, Labour Demand is given by LD

Consider a perfectly competitive labour market, Labour Demand is given by LD = 150 5W, and Labour Supply is given by LS = 1ow, where W is the market wage rate. a. Solve for the market equilibrium wage and level of employment in the market. b. In order to stimulate employment in this industry, the government offers workers an additional $3 for each unit of labour worked. Find the new market equilibrium. c. In this case, what is the welfare gain in the labour market?

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