Q2: The market for unskilled labour is represented by Q = 1,200 - 40w and Q = 160w - 800 where Q is the number of workers per hour and w is the hourly wage rate.

a) What are the equilibrium wage rate and equilibrium quantity in this market? Show your calculations.

b) How much total employment income do workers earn at the market equilibrium? Show your calculations.

c) Suppose the government decides to impose a minimum wage of $14/hour in this market. Is this minimum wage binding on the market and if yes, what is the new total employment income of workers? Show your calculations.

d) Do workers as a group support the government's minimum wage of $14/hour? Explain.

e) Suppose after imposing a minimum wage of $14/hour, the government decides to increase it to $18/hour. What is the new total employment income of workers? Show your calculations.

f) Is demand in this market elastic or inelastic when the wage rate is between $14/hour and $18/hour? Explain.

g) Do workers as a group support the government's increase in the minimum wage from $14/hour to $18/hour? Explain.