The question requires us to determine the number of workers who benefit from the higher wage.
Explanation of Solution
In the given figure, when the government sets a minimum wage law at $10, the quantity supplied in the labor market increases from 80 workers to 110 workers. The number of workers demanded falls from 80 workers to 50 workers.
Quantity supplied = 110 workers
Quantity demanded = 50 workers.
Since the quantity supplied is less than the quantity demanded, there is a surplus of workers in the labor market.
Surplus of workers = Quantity supplied − Quantity demanded
Surplus of workers = 60 workers
Option “c” is correct.
The minimum wage is a price control method used by the government to protect labor from exploitation and to bring the market into a required shape. In this method, the government sets a wage that is above the equilibrium wage in the labor market. The government usually sets price-controlling methods to safeguard the marginal group or a specific group, but these methods result in various types of inefficiencies in the market.
Chapter 8 Solutions
Krugman's Economics For The Ap® Course
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