Draw a labour market diagram that represents the supply and demand of labour and explain why one of the curves is upward sloping and one downward sloping. On this graph, represent a labour shortage and explain the relationship between a labour shortage and the level of wage paid by firms. What employment policy would you recommend to reduce the labour shortage?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter20: Unemployment
Section20.3: Minimum-wage Laws
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Draw a labour market diagram that represents the supply and demand of labour and explain why one of the curves is upward sloping and one downward sloping. On this graph, represent a labour shortage and explain the relationship between a labour shortage and the level of wage paid by firms. What employment policy would you recommend to reduce the labour shortage?

 

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