The demand curve in Sector 1 of the labor market is L1 = a - bw. The demand curve in Sector 2 is L2 = c - dw. The supply curve of labor for the entire market is L = e + fw. In equilibrium, L1 + L2 = L.

a. Solve for the equilibrium with no minimum wage.

Exercises

 = exercise is available on MyEconLab; * = answer appears at the back of this book; M = mathematical problem.

b. Solve for the equilibrium at which the minimum wage is w in Sector 1 (“the covered sector”)

only.

c. Solve for the equilibrium at which the minimum wage w applies to the entire labor market. M