Question

In: Economics

5. Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply...

5. Minimum-wage laws and unemployment

Consider the market for labor depicted by the demand and supply curves that follow.

Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator.

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will result in a shortage or a surplus.

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $9.00.

Which of the following statements are true? Check all that apply.

If the minimum wage is set at $12.50, the market will not reach equilibrium.

Binding minimum wages cause frictional unemployment.

In this labor market, a minimum wage of $9.00 is binding.

In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium.

Shortage or Surplus? Shortage 9.00 hour Surplus Neither reach equilibrium.

Expert Solution

Wage. Labor demanded. Labor supplied. V. Shortage or surplus

9. 750. 450. shortage

Correct statements -

Of the minimum wage is set at $12.50, the market will not reach equilibrium.

In the absence of price controls a shortage puts upward pressure on wages until they rise to the equilibrium.

Rahul Sunny answered 2 years ago

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