1. Give four explanations for why firms might find it profitable to pay wages above the level that balances quantity of labour supplied and quantity of labour demanded.
2. Classify each of the following individuals in one of the following categories: employed, unemployed, or not in the labour force.
   1. Steve worked 40 hours last week in a Music Supply store.
   2. Last week, Elizabeth worked 10 hours as a computer programmer for the National Video Company and attended night classes at the local college. She would prefer a full-time job.
   3. Roger lost his job at the R-gone Manufacturing Company. Since then he has been trying to find a job at other local factories.
   4. Linda is a homemaker. Last week she was occupied with her normal household chores. She neither held a job nor looked for a job.
   5. Linda's father is unable to work.
   6. Scott has a Ph.D. He worked full-time but doesn't like his job as a dishwasher. He has applied for jobs with three companies and five universities. As soon as he gets an offer, he'll quit his current job.
   7. Mary-Helen has been out of work for a full year. She would take a job if it was offered, but no local companies are hiring. She is not actively searching for work.

1. Statistics Canada announced that in May 20XX, of all Canadians aged 15 and older, 17,953,800 were employed, 1,307,600 were unemployed, and 9,970,800 were not in the labour force. How big was the labour force? What was the labour participation rate? What was the unemployment rate?
2. Explain whether each of the following events increases, decreases, or has no effect on the unemployment rate and the labour-force participation rate.
   1. After a long search, Jon finds a job.
   2. Tim, a full-time university student, graduates and is immediately employed.
   3. After an unsuccessful job search, Arya gives up looking and retires.
   4. Max quits his job to become a stay-at-home parent.
   5. Sansa has a birthday, becomes an adult, but has no interest in working.
   6. Jaime has a birthday, becomes an adult, and starts looking for a job.
   7. Lou dies while enjoying retirement.
   8. Jorah dies working long hours at the office.
3. (This problem is challenging.) Suppose that Parliament passes a law requiring employers to provide employees some benefit (such as dental care) that raises the cost of an employee by $4 per hour.
   1. What effect does this employer mandate have on the demand for labour? (In answering this and the following questions, be quantitative when you can.)
   2. If employees place a value on this benefit exactly equal to its cost, what effect does this employer mandate have on the supply of labour?
   3. If the wage is free to balance supply and demand, how does this law affect the wage and the level of employment? Are employers better or worse off? Are employees better or worse off?
   4. If a minimum-wage law prevents the wage from balancing supply and demand, how does the employer mandate affect the wage, the level of employment, and the level of unemployment? Are employers better or worse off? Are employees better or worse off?
   5. Now suppose that workers do not value the mandated benefit at all. How does this alternative assumption change your answers to parts (b), (c), and (d) above?
4. Using a diagram (slide 34) of the labour market, show the effect of an increase in the minimum wage on the wage paid to workers, the number of workers supplied, the number of workers demanded, and the amount of unemployment.