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.