In a tourist-destination city, the market for ATM fillers is perfectly competitive. The demand for ATM fillers is given
by L = 200 − 5W, where L is the number of workers desired and W is their wage. On the supply side of the market, the marginal cost of providing ATM fillers is given by MC = 0.5L.
a. Find the inverse demand for ATM fillers. Then, equate supply and demand for ATM fillers to find the equilibrium quantity of ATM fillers hired in a competitive market.
b. Find the equilibrium wage of ATM fillers.
c. Tired of exploitation by large bank systems, ATM fillers decide to unionize and sell their services collectively. Derive the marginal revenue curve faced by the newly formed ATM fillers' union.
d. Suppose the ATM fillers' union decides to maximize profits. Equate marginal revenue and marginal cost to determine how many ATM fillers will be employed. What wage will they be paid?
e. The unemployment rate is the percentage of workers who are willing to work at a given wage but who are not actually working. Determine how many workers would like to work at the union wage, then calculate the unemployment rate created by unionization.