Let us suppose that labour demand and labour supply are represented by the

equations:

Demand: LD = 10 - 0.5W,

Supply: LS = 0.5W.

a. Find the equilibrium wage and employment level.

b. Graph the curves and indicate the equilibrium on a graph.

c. Suppose hiring is done through a labour union in this market which has limited hiring to 4 workers. What will be

the wage in this market?

d. Give one factor which causes labour demand to increase and one factor which causes labour supply to increase.