Labor Market Equilibrium 6. Suppose demand for low-skilled workers in the United States is given by ED 300 10w and supply of low skilled workers is given by Es = 30w-300, where E represents the number of workers (in millions) and w is the daily wage rate. (a) Solve for the equilibrium wage rate and employment level of low-skilled workers. [2 pts] (b) Plot the labor demand and labor supply functions on the graph below, labeling each as [2 pts] ED and Es, respectively. W 30 25 20 15 10 5 tens of 0 5 10 15 20 25 30 35 E (millions) (c) On your plot above, label (i) worker surplus and (ii) firm surplus. Compute their values [2 pts] here. (d) What is total surplus in the US market for low-skilled labor? [2 pts] Now, suppose the government imposes a $20 minimum wage in this market. (e) Draw the effect of this minimum wage on the plot below, labeling the new (i) worker [3 pts] surplus, (ii) firm surplus, and (iii) any deadweight loss. Note: Assume that the workers with the lowest reservation wages are those that end up employed. This ensures we are calculating the maximum potential surplus as a result of this law. W 30 25 20 15 10 5 tens of 0 5 10 15 20 25 30 35 E (millions) (f) How many workers will be employed as a result of this law? How many workers will be [2 pts] unemployed? (g) What will be the change in (i) worker, (ii) firm, and (iii) total surplus as a result? (h) Calculate the labor demand elasticity. [3 pts] [2 pts]