Please discuss in details YOThe government sets a minimumwage above the Current eauilibriumwase level.(4) whaton equillibriumeffect does it havein labor market(in term a wage level and heemploy ment levele)?(2) what effect does it have on Consumerburplus, Producer Surplus, tolal surplus?andHint: in labor maket, workers are PraducersC.and omployers ave' Consumers' PbHing agraph may help in answering question?

Meaning of Consumer Surplus: The term consumer surplus refers to the situation under which the…

The government Bets a minimum wage above the Current eajuilibrium wase level. (4) what effect does it have on equillibrium in labor market (in term a wage level and the employ ment level)? (2) what effect does it have on burplus, Producer Surplus, tolal Surplus? Consumer and Hint: in labor maket , workers are Praducers and employers are' Consumers' Plo Hing a graph may help in answering questien

The government Bets a minimum wage above the Current eajuilibrium wase level. (4) what effect does it have on equillibrium in labor market (in term a wage level and the employ ment level)? (2) what effect does it have on burplus, Producer Surplus, tolal Surplus? Consumer and Hint: in labor maket , workers are Praducers and employers are' Consumers' Plo Hing a graph may help in answering questien

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 4PA

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Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of foreign investors, the supply curve shifts so that there will be 10 million less supplied at every interest rate. Calculate the new equilibrium interest rate and quantity, and explain why the direction of the interest tale shift makes intuitive sense.
If a usury law limits interest rates to no more than 35, what would the likely impact be on the amount of loans made and interest rates paid?
What is the government budget constraint? How does it help us understandthe causes of high infation?
By law, the government splits the levy of the FICA tax equally between workers and firms.(a) Using a supply and demand diagram, draw the labor market and label the equilibriumwage and employment level assuming FICA did not exist. Then, on the same graph,draw how the imposition of FICA alters labor market outcomes. Make sure to carefullylabel equilibrium wages, wages paid, wages received, and employment.(b) If the government splits the levy of the FICA tax evenly between workers and firms, thenhow is it that some researchers claim that workers pay approximately 90% of payrolltaxes?(c) Assume that labor unions lobby the government to have the entire levy of FICA shifted tofirms. Will workers ultimately be happy under this new tax structure? Why or why not?
Both a payroll tax and an excise tax on alcoholraise revenue and, respectively, shrink the marketsfor labor and alcohol. Although both have somefunctions in common, governments may havedifferent goals when levying them. What goalsdo you think motivate a payroll tax? What goalsmotivate an alcohol tax?
In the economy of Agricola, tenant farmers rent theland they use from landowners. If the supply of landis perfectly inelastic, then a tax on land would have_________ deadweight losses, and the burden of thetax would fall entirely on the _________.a. sizable; farmersb. sizable; landownersc. no; farmersd. no; landowners
(a) Solve for the equilibrium wage and employment level.(b) Graph the demand and supply curves.(c) At this equilibrium, what is your welfare/gains from trade?(d) Now, assume a minimum wage has been implemented at $20. How will this impact yourdemand? Supply?(e) How many workers are displaced by this new policy? How much “extra” unemployment occurswith this new policy? Hint: Think about the reservation wage.(f) Graph the new labor demand and supply with this minimum wage.(g) At this equilibrium, what is your new welfare? Are you better off with this change? Explain.
Next, consider an example of DWL in the labour market. Suppose the demand for labour is given by the fixed gross wage W = $16. The supply is given by W = 0.8L. (a) Illustrate the market geometrically. (b) Calculate the equilibrium amount of labour supplied, and the supplier surplus. (c) Suppose a wage tax that reduces the wage to W = $12 is imposed. By how much is the supplier’s surplus reduced at the new equilibrium?
Suppose the Punjab government requires Coke drinkers to pay a $2 tax on each case of Cokepurchased.a. Draw a supply-and-demand diagram of the market for Coke without thetax. Show the price paid by consumers, the price received by producers,and the quantity of Coke sold. What is the difference between the pricepaid by consumers and the price received by producers?b. Now draw a supply-and-demand diagram for the Coke market with thetax. Show the price paid by consumers, the price received by producers,and the quantity of Coke sold. What is the difference between the pricepaid by consumers and the price received by producers? Has the quantityof Coke sold increased or decreased?
Most government policy decisions have winners and losers. What are the effects of raisingthe minimum wage? It is more complex than simply producers lose and workers gain. Whoare the winners and who are the losers, and what exactly do they win and lose? To whatextent does the policy change achieve its goals?
Suppose that the government imposes a tax onheating oil.a. Would the deadweight loss from this tax likely begreater in the first year after it is imposed or in thefifth year? Explain.b. Would the revenue collected from this tax likely begreater in the first year after it is imposed or in thefifth year? Explain.
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