he minimum wage in year 1 is $1 higher than the equilibrium wage. In year 2, the minimum wage is increased so that it is $2 above the equilibrium wage. We observe that the same number of people are working at the minimum wage in year 2 as in year 1. Does it follow that an increase in the minimum wage does not cause some workers to lose their jobs? Explain your answer

he minimum wage in year 1 is $1 higher than the equilibrium wage. In year 2, the minimum wage is increased so that it is $2 above the equilibrium wage. We observe that the same number of people are working at the minimum wage in year 2 as in year 1. Does it follow that an increase in the minimum wage does not cause some workers to lose their jobs? Explain your answer

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

Problem 3QQ

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Using supply and demand analysis, show the effects a binding minimum wage in a labour market can have on wage and employment levels, VERY clearly.
If the minimum wage is set above the equilibrium wage, the quantity of labor supplied by workers is ______ to the quantity demanded by employers. 1. Lower 2. Same 3. Minor 4. Superior
Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply curves that follow. Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. Then indicate whether this wage will result in a shortage or a surplus. Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $12.50. Which of the following statements are true? Check all that apply. Binding minimum wages cause structural unemployment. in this labor market, a minimum wage of $9.50 would be binding. In the absence of price controls, a surplus puts downward pressure on wages until they fall to equilibrium. If the minimum wage is set at $12.50, the market will not reach equilibrium.
does imposing a living wage have the same outcome as a minimum wage?
Assume the market wage in industry A is $9/hour. If the government increases the minimum wage from $7.25/hour to $10/hour a. Firms in industry A will hire fewer workers b. Firms in industry A will hire more workers because the quantity of labor supplied will increase c. Firms in industry A will continue to hire the same number of workers d. A shortage of labor will exist at the new minimum wage
Draw supply and demand curves for the labor market. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)? If the current market wage is $10.50, how does the labor market adjust back to the equilibrium? If a minimum wage of $8.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control? If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor demanded? what is the quantity of labor supplied? What is the amount of shortage or surplus in the labor market as a result of the price control? Using the supply and demand graph in part (a) above, illustrate the effect of the price control.
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Compare the three labor market graphs below, representing the supply and demand of low-skilled labor, medium-skilled labor, and high-skilled labor respectively. The y-axis is the price of labor ($ per hour) and the X-axis is the number of jobs (in 100,000 jobs). How will the impact of this increase in the minimum wage affect each of these markets?
Is the minimum wage a good policy? Should the government increase the minimum wage or maintain it at its current rate or abolish it altogether.
Below tables shows the data on labor market of Drivers in Muscat city of Oman. Wage rate Monthly in OMR Quantity Demanded Quantity Supplied 200 4500 2000 250 4000 2700 300 3700 3100 350 3400 3400 400 3300 3800 500 3200 4100 a) Suppose that the minimum wage of drivers’ in the market is above the equilibrium wage. By using the demand and supply diagram of the drivers’ market, show the equilibrium wage, the number of employed workers, number of unemployed workers. Also show the total wage payments to drivers. b) Now suppose that the labor secretary is considering a raise in the minimum wage. Explain briefly what would be the effect on unemployment and employment? c) Let’s assume that the demand for drivers was inelastic, what would you propose to increase the minimum wage or lower total wage payments to drivers? Explain briefly why d) Suppose the labor secretary revise the minimum wage at 300 OMR, how do you see this decision?
After implementing the price floor ( in a minimum wage), the supply and demand model suggests that________for labor. 1-quantity supplied will be LESS than quantity demanded 2-quantity supplied will EQUAL quantity demanded 3-quantity supplied will be GREATER than quantity demanded