(Figure: The Effect of a Minimum Wage) Use Figure: The Effect of a Minimum Wage. Suppose the labor market is inequilibrium at E when the government imposes a minimum wage of W. Assuming all workers without jobs are seekingwork, structural unemployment will equal:WagerateWFWEO Qs - QD-OPE-LDQs - QEzero.EQo QELabor supplyLabor demandQsQuantity of labor

Structural unemployment refers to a situation when the economy experiences a higher employee supply…

(Figure: The Effect of a Minimum Wage) Use Figure: The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of Wr. Assuming all workers without jobs are seeking work, structural unemployment will equal: Wage rate WF WE Qs QD- QE-QD Qs - Qr zero. Qo E QE Labor supply Labor demand Qs Quantity of labor

(Figure: The Effect of a Minimum Wage) Use Figure: The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of Wr. Assuming all workers without jobs are seeking work, structural unemployment will equal: Wage rate WF WE Qs QD- QE-QD Qs - Qr zero. Qo E QE Labor supply Labor demand Qs Quantity of labor

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Minimum-wage laws and unemployment Consider the labor market defined by the supply and demand curves plotted on the following graph. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. WAGE (Dollars per hour) 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 + 0 0 Supply Demand 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers) Graph Input Tool Market for Labor Wage (Dollars per hour) Labor Demanded (Thousands of workers) 2.50 875 Labor Supplied (Thousands of workers) ? 125
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Suppose the minimum wage in this economy is $8.70 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the prevailing wage. If the wage is not allowed to fall below $8.70 per hour, the size of the unskilled labor force is workers are considered unemployed. The unemployment rate is defined as the percentage of unemployed workers in the labor force: Unemployment Rate = Unemployed Labor Force x 100 At a minimum wage of $8.70 per hour, the unemployment rate among unskilled workers is approximately workers, and unskilled 4
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WAGE (Dollars per hour) 15 Labor Supply 12 0 200 400 600 Labor Demand 900 1000 QUANTITY (Thousands of workers) Graph Input Tool Labor Market Wage Rate (Dollars per hour) Labor Demanded (Thousands of workers) $11.1 260 Labor Supplied (Thousands of workers) 740 480 Surplus Labor (Thousands of workers) Labor Demand Shifters Tax Credit (Dollars per hour) ° ? Suppose the minimum wage in this economy is $11.10 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the prevailing wage. If the wage is not allowed to fall below $11.10 per hour, the size of the unskilled labor force is workers are considered unemployed. The unemployment rate is defined as the percentage of unemployed workers in the labor force: Unemployment Rate = Unemployed Labor Force x 100 workers, and unskilled At a minimum wage of $11.10 per hour, the…
If the wage is above the equilibrium wage because of a binding minimum wage, the result cyclical unemployment O structural unemployment O seasonal unemployment O frictional unemployment
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