Consider the following demand and supply curves for labour market:

LD=320004000W, LS=8000+6000W, where L is millions of person hours per year, and W is the wage in dollars per hour.

1. Calculate the equilibrium wage that would prevail under a free market.

2. What would be the level of unemployment (in millions of person hours) when the minimum wage of $3.50 per hour is imposed?

(Now suppose that the minimum wage is $1.00 above the equilibrium wage you obtained in Question 1.)

3. Calculate the level of unemployment (in millions of person hours).

4. Calculate the change in consumer surplus (employers' surplus) compared to that under a free market (in million dollars).

(Now forget about the minimum wage. Instead, consider a $1.00 tax that is paid by employers for each hour of labour they hire.)

5. Calculate the level of unemployment (in millions of person hours)

6. Calculate the change in consumer surplus (employers' surplus) compared to that under a free market (in million dollars).