EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 6, Problem 7SP
To determine
Determine the number of low-skilled laborers who will be unemployed when the minimum wages are $8 and $6 per hour.
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A case study in this chapter discusses the federal minimum-wage law.
Suppose the minimum wage is $7 per hour in the market for unskilled labor, as shown on the following graph.
Use the grey point (star symbol) to indicate the market equilibrium wage and quantity of labor in the absence of a minimum wage. Then use the purple point (diamond symbol) to indicate the level of employment at the minimum wage provided, and use the orange point (square symbol) to indicate the quantity of labor supplied at this minimum wage. Finally, use the green polygon (triangle symbols) to show the total wage payments to unskilled workers.
Market EquilibriumMinimum Wage OutcomeLabor Supplied at Minimum WageTotal Wage Payments012345678910109876543210Wage (Dollars per hour)Quantity of Labor （Millions of workers)DemandSupplyMinimum Wage
At the minimum wage of $7 per hour, the level of unemployment is
million workers, and the total wage payments to workers are
million.
Now suppose the…
Economics
The graph on the right shows the demand for and supply of labor in a market with an equilibrium wage rate of $7 per hour.
Show the impact on the graph if a minimum wage of $9 per hour is enacted.
1. Using the point drawing tool, plot the point that illustrates the quantity of labor demanded when the minimum wage is set at $9 per hour. Label your point 'A.'
2.) Using the point drawing tool, plot a point that illustrates the quantity of labor supplied when the minimum wage is set at $9 per hour. Label your point 'B.'
Carefully follow the instructions above and only draw the required objects.
3. According to the graph, when the minimum wage is set at $9 per hoer, there will be ____
unemplovment of _____ workers in this market.
A. frictional; 4 million.
B. structural; 4 million.
C. frictional; 2 million.
D. structural; 2 million.
Find an article on either the current or attempts to raise the minimum wage.
Briefly summarize the article.
Are there any positive effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both?
Are there any negative effects of higher minimum wages mentioned in the article? If so, what are they? Does the article cite evidence, theory, or both?
Do you support a $15/hour minimum wage? Explain your reasons. Did the article influence your thinking at all?
Don't forget to cite your sources.
Chapter 6 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- On page 104 of the third (2019) edition of Naked Economics by Charles Wheelan, Wheelan discusses the possible outcomes of minimum wage. Based on what Wheelan has written and the conversations about minimum wage in the class, which of the below statements is the LEAST likely to be correct if the minimum wage (a price floor) is placed well above the market clearing (equilibrium) wage? Group of answer choices The higher the minimum wage is set above the market clearing or equilibrium rate the more likely it is benefit all workers, as everyone's wages will have increased, and employers will not lay off workers because of the higher wages. The higher minimum wage will benefit those who continue to have a job at the higher wage, but will hurt those who are laid off because employers will hire fewer workers at the higher wage rate. In an era of global production and a global labor pool in which wages in the U.S. are higher than the wages paid to workers in countries such as Mexico, the…arrow_forwardDraw a supply-demand diagram representing the impact of a minimum wage in the labor market. What does economic theory predict about the change in employment with the introduction of or increase in a minimum wage? How does the prediction above vary with elasticity of labor supply and labor demand?arrow_forwardOn a graph of the labor market, show the effects of an increase in the payroll tax.arrow_forward
- The most prominent example of a price floor in industrialized market economies is a minimum (or award) wage. Demonstrate how a minimum wage is likely to affect the total number of workers employed and the unemployment rate. Are all workers made better off by an increase in the minimum wage? Explain. What is the key determinant of the magnitude of the cost of an increase in the minimum wage? What Australian legislation provides a safety net of minimum entitlements for employees?arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. In a labor market, workers supply their labor to the market in exchange for wages, and their behavior is represented by the supply curve. Similarly, firms pay wages to obtain labor, and thus their behavior is represented by the demand curve. In this way, wages are the price of labor. (a). In this market, the equilibrium hourly wage is $________, and the equilibrium quantity of labor is _______ thousand workers. (b). Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a _________ (options: quota, price ceiling, tax, price floor).arrow_forwardConsider the market for hamburgers. Suppose that, in a competitive market without government regulations, the equilibrium price of hamburgers is $7 each, and employees at fast food restaurants earn $19.50 per hour. Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it results in a shortage or a surplus or has no effect on the price and quantity that prevail in the market. Statement Price Control Effect The government prohibits fast food restaurants from selling hamburgers for more than $5 each. Price ceiling or price floor Shortage, surplus, or no effect Due to new regulations, fast food restaurants that would like to pay better wages in order to hire more workers are prohibited from paying more than $14.50 per hour. Price ceiling or price floor Shortage, surplus, or no effect The government has instituted a legal minimum price of $5 each for hamburgers. Price ceiling or…arrow_forward
- Is the minimum wage an example of a price floor or a price ceiling? What are the supply and demand impacts of a minimum wage?arrow_forwardThe following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. In a labor market, workers supply their labor to the market in exchange for wages, and their behavior is represented by the supply curve. Similarly, firms pay wages to obtain labor, and thus their behavior is represented by the demand curve. In this way, wages are the price of labor. In this market, the equilibrium hourly wage is $_________, and the equilibrium quantity of labor is _________ thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a _________ (options: quota, price ceiling, tax, price floor).arrow_forwardConsider the labor market. Draw a graph illustrating an effective minimum wage in the labor market. Please make sure to label the axes accordingly and state who the supplier (workers or firms) and who the demander is (workers or firms). Indicate (clearly) consumer surplus, producer surplus, and deadweight loss in your graph.arrow_forward
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