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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

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BuyFindarrow_forward

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
Chapter 15, Problem 7PA
Textbook Problem
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Using a diagram of the labor market, show the effect of an increase in the minimum wage on the wage paid to workers, the number of workers supplied, the number of workers demanded, and the amount of unemployment.

To determine

Changes in labor market.

Explanation of Solution

The labor market shows the demand and supply of labors. The effect of change in minimum wage on demand and supply of labor is explained with the help of figure shown below.

Figure 1 shows the changes in demand and supply of labor.

In Figure 1, the vertical axis measures the wage rate and the horizontal axis measures the quantity of labor. The upward sloping curve shows the supply curve of labor and downward sloping curve shows the demand curve of labor...

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