What is the equilibrium wage and quantity for taxi drivers in the scenario shown in the link below?  http://postimage.org/image/bi4xpxo3f/

Asked on by lkballer24

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

Given the data in this table, the equilibrium wage for taxi drivers in this market will be $8.50 per hour.  At that wage, 650 taxi drivers will be supplied and demanded.

The equilibrium wage for workers in a given market will be the wage at which the quantity supplied of those workers is the same as the quantity demanded.  At that wage, there will be neither a surplus nor a shortage of workers.  In this table, we can see that the quantity supplied drops 100 drivers for every $1 that the wage goes down.  Similarly, the quantity demanded drops 100 drivers for every $1 that the wage goes up.  We can see that there is a surplus of drivers at $9 per hour and a shortage at $8 per hour.  Exactly in between those two wage levels (at $8.50 per hour) there will be an equilibrium in which 650 taxi drivers are demanded and 650 taxi drivers are willing to work.

We’ve answered 319,815 questions. We can answer yours, too.

Ask a question