Draw supply and demand curves for the labor market. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? If the current market wage is $10.50, how does the labor market adjust back to the equilibrium?
Draw supply and demand curves for the labor market. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? If the current market wage is $10.50, how does the labor market adjust back to the equilibrium?
Chapter4: Markets In Action
Section: Chapter Questions
Problem 12SQ
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Question
- Draw
supply and demand curves for the labor market. - What is the equilibrium hourly wage (W*) and the
equilibrium quantity of labor (Q*)? - If the current market wage is $10.50, how does the labor market adjust back to the equilibrium?
- If a minimum wage of $8.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control?
- If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control?
- Using the supply and demand graph in part (a) above, illustrate the effect of the price control.
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