Question
1.The table below shows the demand and supply schedules for the low-skilled labor market in the city of Jacksonville. Hourly Wage (dollars) Quantity of Labor
1.The table below shows the demand and supply schedules for the low-skilled labor market in the city of Jacksonville.
Hourly Wage (dollars)
Quantity of Labor Supplied (1,000s)
Quantity of Labor Demanded (1,000s)
$8.00
10
50
8.50
20
40
9.00
30
30
9.50
40
20
10.00
50
10
10.50
60
0
a.Draw supply and demand curves for the labor market.
b.What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)?
c.If the current market wage is $10.50, how does the labor market adjust back to the equilibrium?
d.If a minimum wage of $8.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control?
e.If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control?
f.Using the supply and demand graph in part (a) above, illustrate the effect of the price control.
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