Please consider: the demand for labor is not very price sensitive (-.8) and that average wage is $10 per hour. In addition, the total labor force is 300 million with a total amount of unemployment ranging around 10% (i.e 30 million). Elasticity of labor supply is .2.

Q1: Derive the market labor market equilibrium analytically. In addition, explain briefly what the labor demand elasticity (-.8) implies for the US Labor markets (hint.: derive labor demand curve first. keep in mind market equilibrium is reached when all labor force is employed. The demand function for labor equals Ld = 486-21.6W supply function is Ls = 240+ 6.96W