Principles of Microeconomics / Unit 3 MIC 0208 worked example, 60 to 90 seconds
Finding the Equilibrium Wage from a Schedule
The idea
A labor schedule lists wages with the number of workers firms want and the number who offer to work at each. Read down for the wage where the two match; that is the equilibrium wage and employment. At any other wage subtract the smaller number from the larger: above equilibrium the gap is a surplus of labor, workers who want jobs at that wage and cannot find them; below it the gap is a shortage, posts firms cannot fill.
In practice
Worked example: for warehouse workers in a town, at eighteen dollars an hour firms want two thousand four hundred and one thousand six hundred offer to work; at twenty dollars, two thousand and two thousand; at twenty-two dollars, one thousand six hundred and two thousand four hundred. The numbers match at twenty dollars, so two thousand are employed. At eighteen there is a shortage of eight hundred; at twenty-two a surplus of eight hundred.
Where people slip
A surplus of labor is unemployment among the people who want work at that wage, not a general glut. And a shortage does not mean nobody is hired: one thousand six hundred are, and the empty posts are the gap, which a rising wage closes.
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