When there is no intervention, the equilibrium quantity of labor is 4 and the equilibrium wage is $12. Suppose the government decides to impose a price floor in this labor market, as it thinks that a wage of $12 is too low. With the price floor, wages go up to $16, and because of that quantity supplied of labor increases to 5, whereas quantity demanded drops to 2.4. Match the right with the left side correctly: Wages Supply A $16 Price Floor В $12 E D Demand 2.4 4 5 Quantity of Labor Consumer surplus before price floor [ Choose ] Producer surplus before price floor [ Choose ] >

When there is no intervention, the equilibrium quantity of labor is 4 and the equilibrium wage is $12. Suppose the government decides to impose a price floor in this labor market, as it thinks that a wage of $12 is too low. With the price floor, wages go up to $16, and because of that quantity supplied of labor increases to 5, whereas quantity demanded drops to 2.4. Match the right with the left side correctly: Wages Supply A $16 Price Floor В $12 E D Demand 2.4 4 5 Quantity of Labor Consumer surplus before price floor [ Choose ] Producer surplus before price floor [ Choose ] >

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 32P: Imagine that to preserve the traditional way of life in small fishing villages, at government...

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Imagine that to preserve the traditional way of life in small fishing villages, at government decides to impose a price floor that will guarantee all fishermen a certain price for their catch. Using the demand and supply framework, predict the effects on the price, quantity demanded, and quantity supplied. With the enactment of this price floor for fish, what are some of the likely unintended consequences in file market? Suggest some policies other than the price floor to make it possible for small fishing villages to continue.
Why is a living wage considered a price floor? Does imposing a living wage have the same outcome as a 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.
For each “Market Change” there is a Demand column and a Supply Column. In each of those two columns, you shouldwrite one of these three things: Increase, Decrease, or Neither. (Every market change will have at least one “Neither”.) #5 Market Change Demand Supply #6 Market Change Demand SupplyMinimum wage rises. Recently, the price of pools rose instores.Why? Why?#7 Market Change Demand Supply #8 Market Change Demand SupplyOver the past few years,there have been increasedtariffs on goods madeoverseas. How have theseaffected steel markets?(HINT: A tariff is sometimescalled another name.)You start a coffee shop in theStudent Center at CTC. You noticethat you sell about the sameamount of coffee and muffins.Based on this, you decide toincrease the price of muffins. Howwould this affect coffee?Why? Why?#9 Market Change Demand Supply #10 Market Change Demand SupplyIn May, not long after manyreceived a fiscal stimuluscheck, the Nintendo Switchwas difficult to find in stores.Teleconferencing…
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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?
Assume that the supply of low-skilled workers is fairly elastic, but the employers’ demand for such workers is fairly in elastic.If the policy goal is to expand employmentforlow-skilledworkers,is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor?Whatif the policy goal is to raise wages for this group? Explain your answers with supply and demand diagrams.
c. If, in seeking to increase opportunities for lower income families, the government significantly increases subsidies available for individuals to pursue a college education, the point representing the equilibrium wage and quantity of workers will move up and to the right along the market supply curve for labor. the market supply curve for labor will shift to the right. the point representing the equilibrium wage and quantity of workers will move down and to the left along the market supply curve for labor. the market supply curve for labor will shift to the left.
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Suppose BMW runs a great ad campaign thatincreases demand and drives up the price of BMWs.What do you expect will happen to the demand forthe labor in auto-manufacturing plants? Explainhow the equilibrium price and quantity of labor willchange
How do minimum wages affect wages, employment, and unemployment? In a competitive labor market, the demand for workers is given as QD = 10,000 - 100W, and the supply of workers is given as QS = 2,000 + 1,900W, where Q is the quantity of workers employed and W is the hourly wage. What is the initial equilibrium wage and employment level? Suppose that the government decides that $5 per hour is the minimum allowable wage in any market. How would this new minimum wage alter this market? What would the new employment level be? What would happen to total payments to labor? Would there be any excess supply of labor? If so, how much?
Imagine that to preserve the traditional way oflife in small fishing villages, a government decides toimpose a price floor that will guarantee all fishermen acertain price for their catch.a. Using the demand and supply framework,predict the effects on the price, quantitydemanded, and quantity supplied.b. With the enactment of this price floor for fish,what are some of the likely unintendedconsequences in the market?c. Suggest some policies other than the price floorto make it possible for small fishing villages tocontinue.