Consider the labor market for the fast-food industry, which consists mainly of high school and college students. Assume that all fast-food restaurants are profit maximizing. The following calculator shows the market demand curve (blue curve) and market supply curve (orange curve) for student workers, who are responsible for making hamburgers. At any time in this problem, you can click the Reset to Initial Values button to return the elements in the calculator to their original positions. You will not be graded on any changes to the calculator; it's just here to help you answer the following questions. Tool tip: You can directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. WAGE RATE 20 18 16 14 12 10 8 6 X 0 10 20 30 40 50 60 JANTITY OF LABOR (Thousands of workers) 70 80 90 100 Graph Input Tool LABOR MARKET CALCULATOR Wage rate Labor demanded (Thousands of workers) Price of a hamburger (Dollars) 14 30 4 Labor supplied (Thousands of workers) 70 When the price of a hamburger is $4, the equilibrium wage in the fast-food labor market is $10 per hour. Suppose that the demand for hamburgers increases enough so that the price of a hamburger rises to $8 Ordinarily this would result in a pow.cquilibr
Consider the labor market for the fast-food industry, which consists mainly of high school and college students. Assume that all fast-food restaurants are profit maximizing. The following calculator shows the market demand curve (blue curve) and market supply curve (orange curve) for student workers, who are responsible for making hamburgers. At any time in this problem, you can click the Reset to Initial Values button to return the elements in the calculator to their original positions. You will not be graded on any changes to the calculator; it's just here to help you answer the following questions. Tool tip: You can directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. WAGE RATE 20 18 16 14 12 10 8 6 X 0 10 20 30 40 50 60 JANTITY OF LABOR (Thousands of workers) 70 80 90 100 Graph Input Tool LABOR MARKET CALCULATOR Wage rate Labor demanded (Thousands of workers) Price of a hamburger (Dollars) 14 30 4 Labor supplied (Thousands of workers) 70 When the price of a hamburger is $4, the equilibrium wage in the fast-food labor market is $10 per hour. Suppose that the demand for hamburgers increases enough so that the price of a hamburger rises to $8 Ordinarily this would result in a pow.cquilibr
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Uncertain if what I have so far is correct and don’t know how to find the new total for workers
Transcribed Image Text:Consider the labor market for the fast-food industry, which consists mainly of high school and
college students. Assume that all fast-food restaurants are profit maximizing. The following
calculator shows the market demand curve (blue curve) and market supply curve (orange curve)
for student workers, who are responsible for making hamburgers.
At any time in this problem, you can click the Reset to Initial Values button to return the elements
in the calculator to their original positions. You will not be graded on any changes to the calculator;
it's just here to help you answer the following questions.
Tool tip: You can directly change the values in the boxes with the white background by clicking in
the box and typing. The graph and any related values will change accordingly.
WAGE RATE
20
18
16
14
12
10
10
0 10 20 30 40 50 60 70 80 90 100
JANTITY OF LABOR (Thousands of workers)
Graph Input Tool
LABOR MARKET CALCULATOR
Wage rate
Labor
demanded
(Thousands
of workers)
Price of a
hamburger
(Dollars)
14
30
4
Labor
supplied
(Thousands
of workers)
70
When the price of a hamburger is $4, the equilibrium wage in the fast-food labor market is
$10 per hour.
Suppose that the demand for hamburgers increases enough so that the price of a hamburger rises
to $8. Ordinarily, this would result in a new equilibrium employment level and wage in the labor
market for young people who work in fast-food restaurants.
However, restaurants claim they can only afford to pay the initial equilibrium wage. In this labor
market, if the price of hamburgers increases, but restaurants continue to pay the equilibrium wage
that prevailed before the increase in demand for hamburgers, there will be a labor shortage of
workers.
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