Q4. Suppose that the supply of low-skilled labor is given by: = 10 where W is the wage (dollars per hour) and is the quantity of lowskilled labor (in millions of persons employed each year). The demand for low-skilled labor is given by: = 80 10W

a. What will be the equilibrium wage rate and employment level?

c. What is the point elasticity of supply in equilibrium?

d. Now, suppose that the government sets a minimum wage of $5 per hour. d. How many people will be employed at that wage? Show the ceiling and the new equilibrium on your graph (preferably in a different color).

f. What is the arc elasticity over the demand curve for the two points on the demand curve?

g. Will there be any dead-weight loss? If so, calculate the size of the loss.