Consider the labor market, i.e. the market for hours of work. When analyzing labor markets, price is just the hourly wage (e.g. 10 dollars an hour), and quantity is the number of hours demanded (by firms) or supplied (by workers). Suppose the government imposes a minimum wage of $15 per hour. If the demand and supply functions are given by Q = 25 - P and Q = -15 + P, where Q is in million hours and P is in dollars per hour, does the imposition of the minimum wage cause a deadweight loss in the market?

Consider the labor market, i.e. the market for hours of work. When analyzing labor markets, price is just the hourly wage (e.g. 10 dollars an hour), and quantity is the number of hours demanded (by firms) or supplied (by workers). Suppose the government imposes a minimum wage of $15 per hour. If the demand and supply functions are given by Q = 25 - P and Q = -15 + P, where Q is in million hours and P is in dollars per hour, does the imposition of the minimum wage cause a deadweight loss in the market?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 12SQ

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Consider the labor market, i.e. the market for hours of work. When analyzing labor markets, price is just the hourly wage (e.g. 10 dollars an hour), and quantity is the number of hours demanded (by firms) or supplied (by workers). Suppose the government imposes a minimum wage of $15 per hour. True or false? (i) If the inverse demand function is P = 100 -15Q + 0.5Q2, Q<=10, and the supply function is Q = P2/18, where Q is in million hours and P is in dollars per hour, the imposition of the minimum wage will cause the market quantity of work hours to increase. (ii) If the demand and supply functions are given by Q = 10 - P and Q = P, where Q is in million hours and P is in dollars per hour, there will be an excess demand for labor.
The following two linear functions represent a market (thus one is a supply function, the other a demand function). Circle the answer closest to being correct. Approximately what will the quantity demanded be if the government controls the market price to be $3.00 (You must first find the market equilibrium price and quantity in order to see how the $3.00 relates to them)? Q = 100 – 4.6P and Q = 75 + 6.2P 2 There has been a change in the market (represented in 1 above). The change is represented by the following two equations. Circle the one correct conclusion that describes the market change. Q = 65 + 6.2P and Q = 80 – 4.6P 3 Circle the function on the answer sheet that represents the marginal revenue (MR) function for this demand function: Q = 150 – 5P
Which of the following is an example of a price ceiling, or a government regulation put in place to prevent a firm from raising the price of goods? minimum wage agricultural prices minimum rates for the Screen Actors Guild rent control
Assume the market for one bedroom apartments in a large city has the following demand and supply functions, where R is the monthly rent in dollars and Q is the number of one bedroom apartments: Demand: R = 700 – Q Supply: R = 100 + 2Q The government imposes a rent ceiling of $400 per month Draw a graph of the market. Be sure to fully and clearly label the graph, including: the Supply and Demand curves (as D and S respectively), Equilibrium Quantity (Q*), Equilibrium Price (R*), Rent Ceiling (Rc), Quantity Demanded with the Rent Ceiling (Qdc) and Quantity Supplied with the rent ceiling (Qsc).
Which of the following would occur if minimum wage in Ottawa is above the equilibrium wage? quantity of labour demanded will be greater than quantity supplied firms hire more workers no workers are made worse off by the introduction of the minimum wage and some are made better off quantity of labour demanded will be less than quantity supplied.
The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. In a labor market, workers supply their labor to the market in exchange for wages, and their behavior is represented by the supply curve. Similarly, firms pay wages to obtain labor, and thus their behavior is represented by the demand curve. In this way, wages are the price of labor. 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 _________ (options: quota, price ceiling, tax, price floor).
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 . For each of the wages listed in the following table, determine the quantity of labor demanded, the quantity of labor supplied, and the direction of pressure exerted on wages in the absence of any price controls. Wage Labor Demanded Labor Supplied Pressure on Wages (Dollars per hour) (Thousands of workers) (Thousands of workers) 8 12 True or False: A minimum wage above $10 per hour is a binding minimum wage in this market. True False
If the minimum wage is set below the equilibrium wage rate, then the following will hold true: A) Wages will automatically increase in the market. B) There will be excess demand for labour in the market. C) The implementation of a minimum wage will have no impact. D) There will be an excess supply of labour in the market.
choose one in the brackets to fill in for the following question: If the wage rate for workers in car manufacturing rises, the (supply curve , quantity supplied ) for cars will [ increase, decrease, remain unchanged ) and the [ demand curve, quantity demanded) for cars will [ increase, remain unchanged, decrease) Consider a competitive market in equilibrium at (Q1,P1). When there is an increase in demand in this market, what exactly happens in this market? Help describe what happens by selecting the correct sequence of events from the drop-down menus below. [Advice: draw this situation in a competitive market diagram.] step 1:( creates an access demand at the original market price, this allows the market to clear at the original market price , this creates an excess supply at the original market price ) step 2: (this puts upward pressure on the price, this puts downward pressure on the price , this does not affect the price in this market ) step 3: ( there is an increase in supply, as…
The market for a particular consumer good has a demand function given by: q = 24 - p and supply given by p = q + q^2, where q is the quantity and p is the price. Question: If the government decided not to set the price, but instead imposed a tax on production of $1 per unit, effectively increasing the cost to supply by $1 dollar per unit for every level of quantity supplied, what would the new equilibrium quantity be?