1. Suppose that the government raises the minimum wage by 20 percent. Thinking of the four Hicks-Marshall laws of derived demand as they apply to a particular industry, analyze the conditions under which job loss among teenage workers in that industry would be smallest.

3. The federal government, in an effort to stimulate job growth, passes a law that gives a tax credit to employers who invest in new machinery and other capital goods. Applying the concepts underlying cross-elasticities, discuss the conditions under which employment gains in a particular industry will be largest.

4. The public utilities commission in a state lifts price controls on the sale of natural gas to manufacturing plants and allows utilities to charge market prices (whichare 30 percent higher). What conditions would minimize the extent of manufacturing job loss associated with this price increase?

7. Briefly explain how the following programs would affect the elasticity of demand for labor in the steel industry: a. An increased tariff on steel imports. b. Alaw making it illegal to lay off workers for economic reasons.c. A boom in the machinery industry (which uses steel as an input)?causing production in that industry to rise. d. Adecision by the owners of steel mills to operate each mill longer than has been the practice in the past. e. An increase in the wages paid by employers in the steel industry. f. Atax on each ton of steel produced.

Review Questions 1. Suppose that the goverment raises the are 30 percent higher). What conditions minimum wage by 20 percent. Thinking would minimize the extent man of the four Hicks-Marshall laws of de- turing job loss asso rived demand as they apply to a partcu- Increase lar industry, analyze the conditions under 5. Many employers provide health insurance which job loss among teenage workers in for their employees, but others-primarily that industry would be smallest. small employers-do not. Suppose that 2. California employers of more than 50 the government wants to ensure that all workers are now required to offer paid employees are provided with health in- family leave for workers with newbom surance coverage but or BOXES children. Under this law, businesses with some standard. Suppose also that the gov- more than 50 workers are required to emment wants employers to pay for this hold a job for a worker who goes on paid coverage and is considering two options leave for up to six weeks. When on leave Option A : An employer not voluntarily workers receive 55 percent of their nor- offering its employees acceptable coy. mal pay. What are the likely responses on trage would be required to pay a fix of the demand (employer) side of the labor K cents per hour for each labor hour market? Include in your analysis a con employed. The funds collected would sideration of factors that would affect the support goverment-provided health size of these responses. . The federal government, in an chort to A. corpt thatdie simulate job growth, passes a law that govemmani-provided coverage would givesa tax credit to employers who invest be financed by in new machinery and other capital ton of the employ goods. Applying the concepts underlying Compare and contrast the labor market under which employment source ing pur