In the demand for labor for a firm was expressed as L = N x average hours per employee per day. Assume a firm has 50 employees that average 6 hours per day for 300 man-hours per day. A minimum wage is passed and reduces demand to 240 man-hours per day. Answer the following questions.   a. How many layoffs are required if average hours per employee are not reduced? Explain.   b. If no layoffs are made, what would the average hours per employee be set to? Explain.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter10: Labor Markets And Income Distribution
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In the demand for labor for a firm was expressed as L = N x average hours per employee per day. Assume a firm has 50 employees that average 6 hours per day for 300 man-hours per day. A minimum wage is passed and reduces demand to 240 man-hours per day. Answer the following questions.

 

a. How many layoffs are required if average hours per employee are not reduced? Explain.

 

b. If no layoffs are made, what would the average hours per employee be set to? Explain.

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