You work for an unemployment agency that distributes unemployment checks to unemployed workers in your state....

You work for an unemployment agency that distributes unemployment checks to unemployed workers in your state. Your boss recently learned that the president proposed a 21 percent increase in the minimum wage, and she wants you to provide her with an estimate of the number of additional workers who will file for unemployment compensation claims next year if the bill passes. Based on library research at a nearby university, you learn that about 200,000 workers in your state earn at or below the current minimum wage. Further library research turns up a study that reports the own price elasticity of demand for minimum wage earners to be −0.30. Based on your findings, how many additional workers do you think will file unemployment claims in your state?

Solutions

Expert Solution

Here given the price elasticity of demand for minimum wage earners is -0.30. Also given the proposes increase in the minimum wages is 21 percent. Then, that 21 percent increase in the minimum wage earners will decrease the quantity of minimum wage earners is 6.3 percent. That is the total job is calculated as,

peoples are losses their jobs. That means there are 12,600 people must file the unemployment claims.

Rahul Sunny answered 1 year ago

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