Use the following to answer questions:
-(Figure: The Labor Market) Use Figure: The Labor Market. What is the unemployment rate at an efficiency wage of $16, assuming all workers without a job are searching?
A) 10%
B) 20%
C) 27%
D) 73%

Question

Use the following to answer questions: 
-(Figure: The Labor Market) Use Figure: The Labor Market. What is the unemployment rate at an efficiency wage of $16, assuming all workers without a job are searching?
A) 10% 
B) 20% 
C) 27% 
D) 73%

Quizplus · Accepted Answer

At an efficiency wage of $16, the equilibrium wage rate is $18 and the equilibrium quantity of labor is 110. The total number of workers seeking employment is 150, implying that 40 workers are unemployed. The unemployment rate is therefore (40/150) * 100 = 27%.

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