4. Suppose that the short-run labor demand curve is LD = 100 − 10w, where w is the wage rate. Moreover, both unskilled natives and unskilled immigrants both supply their labor inelastically, i.e. the labor supply curve is LS = Q, where Q is the labor force in the labor market. Assume that unskilled natives and unskilled immigrants are perfect substitutes for the firms. Initially, there is 10 natives and 0 immigrants.
(a) What is the equilibrium wage rate initially?(3 marks)
(b) Suppose the number of immigrants increases from zero to 10. What is the new short-run equilibrium wage rate?(3 marks)