ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:3. Minimum wage legislation
The following graph shows the labour market in the fast-food industry in the fictional town of Supersize City.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
Graph Input Tool
(?
20
Market for Labour in the Fast-Food Industry
18
I Wage
(Dollars per hour)
16 +
Labour Demanded
(Thousands of
workers)
Labour Supplied
(Thousands of
workers)
Supply
480
200
14
12
10
Demand
80 160 240 320 400 480 580 640 720 800
LABOUR (Thousands of workers)
WAGE (Dollars per hour)
Transcribed Image Text:In this market, the equilibrium hourly wage is $
and the equilibrium quantity of labour is
,000 workers.
Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a
For each of the wages listed in the following table, determine the quantity of labour demanded, the quantity of labour supplied, and the direction of
pressure exerted on wages in the absence of any price controls.
Wage
Labour Demanded
Labour Supplied
(Dollars per hour) (Thousands of workers) (Thousands of workers)
Pressure on Wages
6.
14
True or False: A minimum wage below $10 per hour is a binding minimum wage in this market.
True
False
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