20. Lochner and the minimum wage. This question involves the labor market for bakers in New York. Suppose that the bakeries all sell bread in a competitive labor market for $2/loaf and the MPL and labor supply are described by these equations: MPL = 3 – L where L is the number of hours of labor Ls = 2w where w is the wage per hour a.) Find the $ value of the MPL (VMPL) function and then the equilibrium wage and amount of labor hired. What is the equilibrium wage? $__/hour b.) The legislature was unhappy about low incomes for bakers so they instituted a minimum wage. Suppose the minimum wage was $3/hr. How many hours of labor are now demanded with the minimum wage? Lp = hours c.) An economist is surprised because he expected total income to fall when the wage rose. In other words he thought that the labor demand curve was very but it turned out to be more a. elastic, inelastic b. inelastic, elastic

20. Lochner and the minimum wage. This question involves the labor market for bakers in New York. Suppose that the bakeries all sell bread in a competitive labor market for $2/loaf and the MPL and labor supply are described by these equations: MPL = 3 – L where L is the number of hours of labor Ls = 2w where w is the wage per hour a.) Find the $ value of the MPL (VMPL) function and then the equilibrium wage and amount of labor hired. What is the equilibrium wage? $__/hour b.) The legislature was unhappy about low incomes for bakers so they instituted a minimum wage. Suppose the minimum wage was $3/hr. How many hours of labor are now demanded with the minimum wage? Lp = hours c.) An economist is surprised because he expected total income to fall when the wage rose. In other words he thought that the labor demand curve was very but it turned out to be more a. elastic, inelastic b. inelastic, elastic

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter12: Labor Markets And Labor Unions

Section: Chapter Questions

Problem 1.1P

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