Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 20

Suppose a firm's labor demand equation is L d = 40 - 2( w ), and the labor supply equation that it faces is L s = -20 + 3( w ), where w is the wage per hour worked.
a. Find the equilibrium wage and quantity of labor employed.
b. The workers, thinking that their wages are too low, decide to strike. After tense negotiations, the firm decides to raise the wage by 50 percent. After the wage increase, how many people are unemployed?