Minimum wage legislation

The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

09018027036045054063072081090020181614121086420WAGE (Dollars per hour)LABOR (Thousands of workers)DemandSupply

Graph Input Tool

Market for Labor in the Fast Food Industry
	Wage (Dollars per hour)
	Labor Demanded (Thousands of workers)			Labor Supplied (Thousands of workers)

In this market, the equilibrium hourly wage is

, and the equilibrium quantity of labor is

thousand workers.

Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a .

For each of the wages listed in the following table, determine the quantity of labor demanded, the quantity of labor supplied, and the direction of pressure exerted on wages in the absence of any price controls.

Wage	Labor Demanded	Labor Supplied	Pressure on Wages
(Dollars per hour)	(Thousands of workers)	(Thousands of workers)
8
12

True or False: A minimum wage above $10 per hour is not a binding minimum wage in this market.

True

False

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