6. Assume that labor supply and labor demand are described by the following equations:

Labor supply: L S = 5 * w Labor demand: L D = 110 - 0.5 * w where w = wage is expressed in dollars per hour, and LS and LD are expressed in millions of workers.

a. Find the equilibrium wage and the equilibrium level of employment

b. Assume that there is a shock to the economy, such that the labor demand curve is now described by the equation L D = 55 - 0.5 * w.
If wages are flexible, what will be the new equilibrium wage and level of employment? Show your work.

c. Now assume that wages are rigid at the level you found in part (a). What will employment be at this wage? How many workers will be unemployed?