Market research has revealed that demand for labour in EC2Land is given by:

Ld = 10 000 - 2 500w and the supply of labour is given by Ls = 5 000w - 5 000, where w = wage rate and L = hours of labour.

1. Calculate the equilibrium wage rate and the number of people who would be employed at the equilibrium wage rate.

2. The government is contemplating an increase in the minimum wage to R2.50 per hour. If a minimum wage of R2.50 / hour is imposed, calculate the workers' surplus (i.e., calculate the producer surplus after the minimum wage has been imposed). [Round off to the second decimal place.]

[Please show all your calculations as well as the formula you used to perform each calculation. Ensure that you have also drawn a fully-labelled diagram as part of your answer to Questions 1 and 2above. All axes and curves must be labelled. Furthermore, all relevant arrows and intercepts must be shown. Applicable theory may also be mentioned.]