Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 19, Problem 2E
To determine
To explain:
The effect of minimum wage over
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Students have asked these similar questions
Why do minimum wage laws cause unemployment? Explain, using a supply anddemand diagram.
Which of the following is not correct?
In a labor market, the wage adjusts to balance the supply and demand for labor.
A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor.
Any event that changes the supply or demand for labor must change the equilibrium wage.
Any event that changes the supply or demand for labor must change the value of the marginal product.
Assume that the economy is in a recession and demand for labor is falling. Assume that wages are sticky.
Draw a supply and demand graph that represents the labor market. Draw a graph that depicts what has happened to our demand and supply curves in the labor market, including our new equilibrium price and quantity of labor. Will the market experience an increase or a decrease in unemployment?
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- The graph shows the market for apple pickers in New England. Question Viewer what is the equilibrium wage rate and the equilibrium quantity of pickers employed? If the New England states introduce a minimum wage of $7.00 an hour, how many apple pickers are employed and how many are unemployed? The equilibrium wage rate of apple pickers is $10.50 an hour and the equilibrium quantity of apple pickers employed is 7000. If the New England states introduce a minimum wage of $7.00 an hour, pickers are employed and pickers are unemployed. 17.50- 14.00- 10.50- 7.00- 3.50+ Wage rate (dollars per hour) 3500 5250 7000 Quantity (pickers) 8750 S D 10500 Uarrow_forwardDraw a graph that shows when minimum wage is expected to result in little or no unemployment as long as the wage remains in the indeterminant range.arrow_forwardHow do wages affect labor supply?arrow_forward
- Suppose the market for ensaimada is described by the following equations. Qd = 1000 -50P Qs = 500 + 50P where Qd = quantity demanded Qs = quantity supplied P = price Explain how the minimum wage law can lead to unemployment.arrow_forwardDescribe the two possible effects that an increase in the wage rate can have on labor supply. Which effect do you expect to dominate under normal circumstances?arrow_forwardWhich of the following would increase the demand for labor? There’s an increase in the number of workers The price of the output good increases The substitution effect makes leisure more expensive as wages increase Leisure is a normal good and the income effect occurs when wages changearrow_forward
- How does the amount of unemployment created by an increase in the minimum wage depend on the elasticity of labor demand? Do you think an increase in the minimum wage will have a greater unemployment effect in the fast-food industry or in the lawn-care/landscaping industry?arrow_forwardWage rate (dollars per hour) 8 9 2 0 20 20 30 0 40 D 40 80 80 Labour (millions of hours) Based on the above labour market graph, if the minimum wage is set at $3.00/hour then unemployment isarrow_forward
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