# How To Calculate Equilibrium Wage Rate

Assuming you are referring to the wage at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers there are a few different ways to calculatethe equilibrium wage rate.

One method is to use a supply and demand diagram. The horizontal axis represents the quantity of labor while the vertical axis represents the wage rate. The labor supply curve shows the quantity of labor that workers are willing to supply at different wage rates while the labor demand curve shows the quantity of labor that employers are willing to demand at different wage rates. The point at which the two curves intersect is the equilibrium wage rate.

Another way to calculate the equilibrium wage rate is to use the following formula:

Equilibrium wage rate = marginal revenue product of labor

The marginal revenue product of labor (MRPL) is the increase in revenue that a company will see from hiring one additional unit of labor. To calculate the MRPL you need to know the marginal revenue (MR) and the marginal product of labor (MPL). The marginal revenue is the increase in revenue that a company will see from selling one additional unit of a good or service. The marginal product of labor is the increase in output that a company will see from hiring one additional unit of labor.

To calculate the equilibrium wage rate you take the MRPL and divide it by the MPL.

MRPL = MR/MPL

Equilibrium wage rate = MRPL/MPL

There are a few different ways to calculate the equilibrium wage rate. The most common methods are to use a supply and demand diagram or to use the formula: