WAGE (Dollars per hour) 20 18 16 2 0 0 1 1 I 2 0 I Levied on Employers (Dollars per hour) 60 120 180 240 300 360 420 480 540 600 LABOR (Number of workers) Tax Proposal Supply Demand 24 Levied on Workers (Dollars per hour) 0 1 Quantity Hired (Number of workers) Market for Laboratory Aides 000 Wage (Dollars per hour) Labor Demanded (Number of workers) Demand Shifter For each of the proposals, use the previous graph to determine the new number of laboratory aides hired. Then compute the after-tax amount paid by employers (that is, the wage paid to workers plus any taxes collected from the employers) and the after-tax amount earned by laboratory aides (that is, the wage received by workers minus any taxes collected from the workers). Tax Levied on Employers (Dollars per hour) 4 480 0 Labor Supplied (Number of workers) After-Tax Wage Paid by Employers (Dollars per hour) Supply Shifter Tax Levied on Workers (Dollars per hour) 120 After-Tax Wage Received by Workers (Dollars per hour) 1000

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4. Minimum wage legislation The following graph shows the labor 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 Market for Labor in the Fast Food Industry 20 I Wage (Dollars per hour) 18 Supply 16 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) 500 210 14 Demand 2. 50 100 150 200 250 300 350 400 450 500 LABOR (Thousands of workers) In this market, the equilibrium hourly wage is $ and the equilibrium quantity of labor is thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a WAGE (Dollars per hour)

6. Contrasting labor union laws in two states Consider two states that adopt different laws concerning labor unions. The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour. Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour. 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. Graph Input Tool Market for Labor 16 14 Supply Wage 2.00 (Dollars per hour) 12 1,400 200 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) 10 Demand 200 400 600 800 1000 1200 1400 1600 LABOR (Thousands of workers) Enter $10.00 into the box labeled Wage on the previous graph. Hint: Be sure to pay attention to the units used on the graph. At the union wage, union workers will be employed. WAGE (Dollars per…