From time to time (including now) the Federal government (or more often individual states) has raised or considered raising the minimum wage. Suppose the supply of low-skilled labor is given by L S = 10w, where L S is the quantity of low-skilled labor (in millions of persons employed each year) and w is the wage rate (in dollars per hour), and the demand for labor is given by L D = 8010w.

A.) ) What is the free-market wage rate and employment level? (The value of w that makes the supply of labor equal to the demand for labor).

B.) Now suppose the government sets a minimum wage of $5 per hour. How many people are employed?

C.) Draw a graph of the supply and demand for low-skilled labor and show the minimum wage, the buyer surplus, the seller surplus, and the dead weight loss associated with the minimum wage