7.

7. Problems and Applications Q7 The following graph shows a labor market with a binding minimum wage. Use the blue point (circle symbol) to indicate the quantity of labor demanded, and use the orange point (square symbol) to indicate the quantity of labor supplied in this case. Supply O Demand Initial Labor Demanded O Initial Labor Supplied + Wage Minimum Wage New Labor Demanded New Labor Supplied Quantity of LaborSuppose there is an increase in the minimum wage. On the previous graph, shift the black line labeled \"Minimum Wage\" to show the effect this has on the wage paid to workers. Then use the green point (triangle symbol) to indicate the new quantity of labor demanded, and use the purple point (diamond symbol) to indicate the new quantity of labor supplied given this increase in the minimum wage. True or False: The amount of unemployment in this industry falls as a result of the increase in the minimum wage. 0 True 0 False 10. Problems and Applications Q10 Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation. On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labor. 20 Demand Supply A 18 New Demand 16 14 12 New Supply 10 Wage (Dollars per hour) 00 Equilibrium Before Law A Equilibrium After Law N 2 3 5 6 7 8 9 10 Quantity of Labor (Thousands)Suppose employees place a value on this benefit exactly equal to its cost. On the preceding graph, use the purple line (diamond symbol) to show the effect this employer mandate has on the supply of labor. Suppose the wage is free to balance supply and demand. Use the black paint (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to indicate the equilibrium wage and level of employment after this law is implemented. True or False: Employers are made worse off but employees are made better off by this law. 0 True 0 False Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. In this case, the wage rate with the employer mandate will be I:] per hour, which will lead to V in the level of employment and V in the level of unemployment. Now suppose that workers do not value the mandated benefit at all. which of the following statements are true under this circumstance? Check all that apply. C] Employees are better off than before the mandated benefit. [3 Employers are worse off than before the mandated benefit. [:1 The equilibrium quantity of labor will decline. [3 The wage rate will decline by more than $4. [:1 The supply curve of labor doesn't shift at all. Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. In this case, the wage rate with the employer mandate will be per hour, which will lead to V in the level of employment and V in the level of unemployment. an increase Now suppose that workers do not value the mandated benefit at all. no changes a decrease which of the following statements are true under this circumstance? Check all that apply. C] Employees are better off than before the mandated benefit. C] Employers are worse off than before the mandated benefit. [:1 The equilibrium quantity of labor will decline. C] The wage rate will decline by more than $4. [:1 The supply curve of labor doesn't shift at all. Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. In this case, the wage rate with the employer mandate will be per hour, which will lead to V in the level of employment and V in the level of unemployment. a decrease at workers do not value the mandated benefit at all. an increase Ilowing statements are true under this circumstance? Check all that apply. no changes I Employees are better off than before the mandated benefit. C] Employers are worse off than before the mandated benefit. [:1 The equilibrium quantity of labor will decline. C] The wage rate will decline by more than $4. [:1 The supply curve of labor doesn't shift at all