Question
Hi I don't know how to solve this question Q. The following equations describe market for goods and the market for labour. A fall in
Hi I don't know how to solve this question
Q. The following equations describe market for goods and the market for labour. A fall in the
demand for goods (i) lowers the quantity supplied, (ii) makes firms reduce activity and lay
off workers, (iii) reduces the demand for labour, and (iv) reduces wages.
Demand for goods, Y = quantity: P = 8 - Y+ 0.2W
Demand for labour: W = 6 - N + 0.4P
Supply of goods: P = Y + 0.2W
Supply of labour (inelastic) N = 2
a. Calculate the equilibrium Y, N, W, and P.
b. Suppose the government imposes a 10 percent tax on wages. Calculate the effects on
prices, employment, wages, and quantity
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