The accompanying graph depicts a market for labor. What is the equilibrium wage and equilibrium quantity of
Question:
The accompanying graph depicts a market for labor.
What is the equilibrium wage and equilibrium quantity of workers that will be hired in this particular labor market? Suppose the government imposes a minimum wage in this market at $4 per hour. What would happen in this market as a result of the new minimum wage? Suppose that the government decides to increase the minimum wage to $10 (a $6 increase). What would happen in this market as a result of the increase in the minimum wage?
Transcribed Image Text:
Wage ($ per hour) $12 $11 $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 0 100 200 Labor supply 500 600 Number of workers Stevenson/Wolfers, Principles of Economics, 1e, 2020 Worth Publishers Labor demand 300 400
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 40% (5 reviews)
Equilibrium wage and quantity The equilibrium wage is the wage at which the quantity of labor demanded by employers is equal to the quantity of labor supplied by workersThis is shown in the graph below at point Ewhere the wage is 5 per hour and the quantity of workers is 100 Impact of a 4 minimum wage A 4 minimum wage will set a floor on the wage that employers can payThis means that all workers will be paid at least 4 per houreven if the market wage would otherwise be lower The 4 minimum wage will create a surplus of laboras shown in the graph belowThis is because employers will demand fewer workers at the higher wagebut workers will still be willing to supply the same amount of labor The surplus of labor will lead to unemploymentSome workers will be unable to find jobs because employers are not willing to pay them the 4 minimum wage Impact of a 10 minimum wage A 10 minimum wage will create an even larger surplus of laboras shown in the graph belowThis is because employers will demand even fewer workers at the even higher wage The unemployment rate will be higher with a 10 minimum wage than with a 4 minimum wage Conclusion A minimum wage can create a surplus of labor and lead to unemploymentThe higher the minimum wagethe larger the surplus of labor and the higher the unemployment rate Graph The following graph illustrates the impact of a minimum wage The blue curve represents the initial demand curve for laborand the red curve represents the demand curve for labor after the minimum wage is implementedThe equilibrium wage without the minimum wage is 5 per hourand the equilibrium wage with the minimum wage is 4 per hour The 4 minimum wage creates a surplus of laboras shown by the shaded area in the graphThe surplus of labor will lead to unemployment The 10 minimum wage would create an even larger surplus of labor and the unemployment rate would be even higher 500 Employment Lador supply Unemployment Labor demand ...View the full answer
Answered By
Shehar bano
I have collective experience of more than 7 years in education. my area of specialization includes economics, business, marketing and accounting. During my study period I remained engaged with a business school as a visiting faculty member and did a lot of business research. I am also tutoring and mentoring number of international students and professionals online for the last 7 years.
5.00+
4+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Sciences questions
-
Nancy is concerned about the cost of post secondary education. She opened a RESP account for her two children. Related to the tax consequences with a RESP: a. Interest on funds borrowed to make a...
-
In the U.S., the social security system is funded by a payroll (wage) tax of 12.4% that is split equally between employer and employee; i.e. the statutory incidence of the social security tax falls...
-
The accompanying graph depicts workers with various academic degrees along with their income levels. Identify how the graph is deceptive. $24,544 $33,852 $57,616 $80,877 Advanced Degree No High Schoo...
-
Inventory Ratio Calculations Dell Technologies reported the following data for 2018 and 2019 (in millions): Inventory February 3, 2017 $ 2,538 February 2, 2018 2,678 February 1, 2019 3,649 Cost of...
-
Lessor Company and Lessee Company enter into a five year, non-cancelable, direct financing lease on January 1, 2007 for a new computer that cost the Lessor Company $400,000 (useful life is five...
-
In the Joys Daycare BE example in the chapter, how would a $1,000 annual advertising expenditure impact the business break-even point?
-
Abbygail Books has two divisions, Edmonton and Toronto, and their results for 2011 were as follows: The companys desired rate of return is 22%. What are the respective return-on-investment ratios for...
-
The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Companys three products: A, B, and C: Due to a strike in the plant of one of its...
-
What is the value of x in the triangle ABC if the given triangles are similar? A D C 5 cm 10 cm 12 cm 16 cm 10 X B E 14 cm F 5 7 cm
-
Provide a real-world example of a quantity regulation. Under what circumstances will it impact market outcomes?
-
Provide a real-world example of a price floor. How could the price floor result in a surplus?
-
Knight Corporation wholesales auto parts to auto manufacturers. On March 1,2012, Knight Corporation issued $ 17,500,000 of five-year, 12% bonds at a market (effective) interest rate of 10%, receiving...
-
The two employees of Silver Company receive various fringe benefits. Silver Company provides vacation at the rate of $405 per day. Each employee earns one day of vacation per month worked. In...
-
WAP (Write a Program) to find if number is single digit or double Hint: (If num> 10 then it is double digit) Ignore: three digits and above and even negative range Q2) WAP to enter your first name...
-
Describe an O(n) time/space algorithm to visit the nodes of a binary tree by levels. For example, the levels traversal for the right tree is F, B, G, A, D, I, C, E, H. B Assume we refer to the item...
-
J. Complete the table and determine the complexity of the algorithm Note: in your solution consider the condition a[i] == key is always false (i.e. the key does not exist in the array) Statement int...
-
In the assignment you will implement a BinarySearch Tree class. You should design this class so that it is efficient. You are allowed to use helper classes (e.g. Node). Note efficient does not...
-
a. Use a computer to draw 500 random samples, each of size 20, from the normal probability distribution with mean 80 and standard deviation 15. b. Find the mean for each sample. c. Construct a...
-
Explain the Hawthorne effect.
-
How do you think a furniture manufacturers buying habits and practices would be affected by the specific type of product to be purchased? Consider fabric for upholstered furniture, a lathe for the...
-
Discuss the importance of target marketing when analyzing organizational markets. How easy is it to isolate homogeneous market segments in these markets?
-
Explain how NAICS codes might be helpful in evaluating and understanding business ma r kets. Give an example.
-
The comparative statements of Oriole Company are presented here: ORIOLE COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $1,895,640 $1,755,600 Cost of goods sold...
-
Lars Linken opened Pronghorn Cleaners on March 1, 2022. During March, the following transactions were completed. Mar Issued 9,800 shares of common stock for $14,700 cash. 1 1 1 2 3 9 6. Borrowed...
-
Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $90 per unit. Variable expenses are $63 per stove, and fixed expenses associated with the...
Study smarter with the SolutionInn App