Suppose that Congress caps executive pay at a level below the market equilibrium. The graph shows the market for corporate executives. Draw a line to show a cap on executive pay at a level below the market equilibrium. Label it Pay cap. Draw a point to show the quantity demanded at the pay cap. Label it 1. Draw a point to show the quantity supplied at the pay cap. Label is 2. Draw a shape that represents the deadweight loss created by the pay cap. Label DWL. Draw a point to show the highest pay that an executive might be offered in a black market. Label it 3. 10- 8- 6- 4- 2- 0 0 O Executive compensation (millions of dollars per year) 9 2.5 ADD A LABEL 4 + D 5 Quantity (thousands of executives) >>> Draw only the objects specified in the question. G

Suppose that Congress caps executive pay at a level below the market equilibrium. The graph shows the market for corporate executives. Draw a line to show a cap on executive pay at a level below the market equilibrium. Label it Pay cap. Draw a point to show the quantity demanded at the pay cap. Label it 1. Draw a point to show the quantity supplied at the pay cap. Label is 2. Draw a shape that represents the deadweight loss created by the pay cap. Label DWL. Draw a point to show the highest pay that an executive might be offered in a black market. Label it 3. 10- 8- 6- 4- 2- 0 0 O Executive compensation (millions of dollars per year) 9 2.5 ADD A LABEL 4 + D 5 Quantity (thousands of executives) >>> Draw only the objects specified in the question. G

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

A conservative critic of government programs has written Governments know A conservative critic of government programs has written, “Governments know how to do one thing well. They know how to create shortages and surpluses.” Explain this quotation using examples like the minimum wage or interest-rate ceilings. Show graphically that if the demand for unskilled workers is price-elastic, a minimum wage will decrease the total earnings (wage times quantity demanded of labor) of unskilled workers. A conservative critic of government programs has written Governments know
Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. Graph Input Tool 20.0 Market for Labor 17.5 I Wage (Dollars per hour) Supply 2.50 15.0 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) 875 125 12.5 10.0 7.5 5.0 Demand 2.5 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers) WAGE (Dollars per hour)
When there is no intervention, the equilibrium quantity of labor is 4 and the equilibrium wage is $12. Suppose the government decides to impose a price floor in this labor market, as it thinks that a wage of $12 is too low. With the price floor, wages go up to $16, and because of that quantity supplied of labor increases to 5, whereas quantity demanded drops to 2.4. Match the right with the left side correctly: Wages Supply A $16 Price Floor $12 E D Demand 2.4 4 5 Quantity of Labor Consumer surplus before price floor [ Choose ] Producer surplus before price floor [ Choose ] > > B.
Write legibly, what I cannot read I cannot grade. Make sure that you label the graph completely and indicate all known information on the graph. Consider the labor market. Draw a graph illustrating an effective minimum wage in the labor market. Please make sure to label the axes accordingly and state who the supplier (workers or firms) and who the demander is (workers or firms). Indicate (clearly) consumer surplus, producer surplus, and deadweight loss in your graph.
Complete the following table with the quantity of labor supplied and demanded if the wage is set at $15.00. 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. Labor Demanded. Labor Supplied Wage $15.00 (Thousands of workers) (Thousands of workers) Shortage or Surplus? 450 Surplus 750 Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.00. Which of the following statements are true? Check all that apply. In this labor market, a minimum wage of $15.00 would be binding. Binding minimum wages increase the natural rate of unemployment. If the minimum wage were set at $11.50, the market would still be able to reach equilibrium. In the absence of price controls, a surplus puts upward pressure on wages until they rise to the equilibrium.
4. Minimum-wage laws and unemployment Consider the labor market defined by the supply and demand curves plotted on the following graph. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. WAGE (Dollars per hour) 24 21 18 15 12 9 6 3 0 0 Supply Demand 150 300 450 600 750 900 1050 1200 LABOR (Thousands of workers) Graph Input Tool Market for Labor Wage (Dollars per hour) Labor Demanded (Thousands of workers) 3.00 1,050 Labor Supplied (Thousands of workers) 150
In the city of Growville, the equilibrium employment is 100,000 workers, and the equilibrium wage is $100 per day. The elasticity of demand for labor is 1.0 (in absolute value) and the elasticity of supply of labor is 5.0. The employment multiplier is 2.0. Suppose the demand for labor used in the production of exports increases by 6,000 jobs. a. Use a supply-demand graph of the urban labor market to show the effects of the increase in the demand for labor. b. The equilibrium wage [increases, decreases] by percent (to ) computed as. . . . c. The equilibrium employment [increases, decreases] by percent (to workers), computed as. . .
Graph Input Tool Market for Labor 20.0 I Wage (Dollars per hour) 2.50 17.5 Supply Labor Supplied (Thousands of workers) Labor Demanded (Thousands of workers) 15.0 875 125 12.5 10.0 7.5 Demand 5.0 2.5 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers) Complete the following table with the quantity of labor supplied and demanded if the wage is set at $7.50. 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. Labor Supplied Labor Demanded (Thousands of workers) (Thousands of workers) Shortage or Surplus? Wage $7.50 Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $7.50. Which of the following statements are true? Check all that apply. WAGE (Dollars per hour)
How does the amount of employment created by an increase in the minimum wage depend on the elasticity of labor demand? Group of answer choices: a. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more elastic. b. When the demand for labor is more elastic, raising the minimum wage has no impact on employment. c. When the demand for labor is more inelastic, raising the minimum wage has no impact on employment. d. When the minimum wage increases, employment will fall by a greater amount when the demand for labor is more inelastic.
Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. 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. Wage $12.50 Labor Demanded Labor Supplied (Thousands of workers) (Thousands of workers) Shortage or Surplus? 375 625 Surplus Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $12.50. Which of the following statements are true? Check all that apply. In this labor market, a minimum wage of $9.50 would be binding. Binding minimum wages cause structural unemployment. In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium. If the minimum wage is set at $12.50, the market will not reach equilibrium.
Assume that the supply of low-skilled workers is fairly elastic, but the employers’ demand for such workers is fairly inelastic. If the policy goal is to expand employment for low-skilled workers, is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor? Sketch a graph to help compare and contrast the two options.
This question explores how a wage subsidy like the EITC impacts the labor market. Suppose that labor demand is described by w = 17 – 2L and labor supply is described by Ls = w - 5. Find the equilibrium wage. The exact size of the EITC varies from state and state and depends on how many children you have but on average it pays about $3/hour extra on top of the market wage. You can model this like a tax so the wage in the supply curve is now $3 more than the wage in the demand curve. In equilibrium, how much do employees get paid per hour (in total)?