Assume that the labor market in a fictional country is characterized by a downward-sloping labor demand (Ld (w) = 1250 w2 ), and an upward-sloping labor supply (Ls (w) = 2w2). a. Unemployment rate We can show, although you are not required to do so for this exercise, that equilibrium wage for this economy is w? = 5, and equilibrium employment is L? = 50. Given what is shown in Figure 1, if the government of Harponia were to impose a minimum wage of 5.5, what would be the unemployment rate (u?) predicted by the frictionless model? (25 points)

Assume that the labor market in a fictional country is characterized by a downward-sloping labor demand (Ld (w) = %\"] and an upwardsloping labor Supply (L3 (w) = 2w2]_ a. Unemployment rate We can show, although you are not required to do so For this exercise, that equilibrium wage for this economy is 111' 5. and equilibrium employment is L* 50. Given what is shown in Figure 1. ii the government of Harponia were to impose a minimum wage of 5.5, what would be the unemployment rate UN} predicted by the frictionless model? [25 points) Figure 1: Frictioniess Labor Modelr L\"(will Wm =5.5 La'iwi L\"'[5.5}=4| .32 \"=50 Lsi'5.5}= 60.5 L