Microeconomics 4 ACTIVITY 48 MicroeconomicS LESSON 3 . ACTIVITY 48 (continued) 4. What determines the market supply of labor? How Wages Are Determined in Competitive Labor Markets Figure 48.1 5. Why is the market supply curve for labor upward sloping? Wages and Labor $5.50 5.00 6. What is the equilibrium wage in this labor market?. 4.50 7. How many workers will be hired in this labor market? 4.00 3.50 8. If a minimum-wage law raises the minimum wage to $4.00 an hour, what quantity of labor will WAGE R be supplied? 2.50 9. At a minimum wage of $4.00 an hour, what quantity of labor will be demanded? 2.00 1.50 10. How many workers would be laid off or would lose their jobs because of this minimum wage? 1.00 .50 11. How many workers entered the labor force seeking a job because of this minimum wage? ol 100 200 300 400 500 600 700 800 0 1,000 QUANTITY OF LABOR 12. If the demand for labor were more inelastic, would more or fewer workers lose their jobs because of this minimum wage? Use Figure 48.1, which shows the supply and demand curves for a perfectly competitive labor market in a perfectly competitive product market, to answer these questions: 13. Would skilled or unskilled workers be more likely to lose their jobs because of a minimum-wage law?_ 1. What two factors affect the demand for labor? 14. Who benefits from the minimum wage? 2. How does marginal revenue product affect the demand for labor? 15. Who is hurt by the minimum wage? 16. Do you favor a higher minimum wage? Why or why not? 3. Why is the demand curve for labor downward sloping? Adapted from Robert W. Pulsinelli and Roger LeRoy Miller, Student Learning Guide to Accompany Economics Today, 8th edition (New York: HarperCollins College Publishers, 1994). 240 Advanced Placement Economics Microeconomics: Student Activities National Council on Economic Education, New York, N.Y. Advanced Placement Economics Microeconomics: Student Activities . National Council on Economic Education, New York, N.Y. 239 154 153