Chapter 5, Problem 5P

To determine

1. Equilibrium wage and number of graduates hired per year.
2. Involuntary unemployment at a minimum yearly wage is set.
3. Relationship between the level of involuntary unemployment and the level of minimum wage.

Concept Introduction

Price Floor: When the government fixes the minimum price of a good or service, it is known as price floor. Price floor is fixed by the government to protect the price from going too low.