onsider an economy in which the marginal product of labor, MPN, is: MPN 500-2N, where N is the amount of labor used. he amount of labor supplied, NS, is given by: NS = 18 + 10w + 37, where w is the real wage, and Tis a lump-sum tax levied on individuals. Suppose that T= 41. The equilibrium value of employment is (round your answer to two decimal places). The equilibrium value of the real wage is (round your answer to two decimal places). Suppose in this situation, the government passes minimum-wage legislation that requires firms to pay a real wage greater than or equal to $1 Which of the following best explains the effect on the labor market? O A. The increase in the wage rate will cause the supply of labor to increase, and thus employment will increase. O B. The minimum wage is below the equilibrium wage, so there is no effect on the labor market. O C. The wage rises to $10.88, the quantity of labor demanded increases, and employment increases. D. The wage will rise to more than $10.88 due to the resulting shortage of labor, and thus there will be no unemployment. OE. The wage rises to $10.88, the quantity of labor demanded decreases, and there is now unemployment.
onsider an economy in which the marginal product of labor, MPN, is: MPN 500-2N, where N is the amount of labor used. he amount of labor supplied, NS, is given by: NS = 18 + 10w + 37, where w is the real wage, and Tis a lump-sum tax levied on individuals. Suppose that T= 41. The equilibrium value of employment is (round your answer to two decimal places). The equilibrium value of the real wage is (round your answer to two decimal places). Suppose in this situation, the government passes minimum-wage legislation that requires firms to pay a real wage greater than or equal to $1 Which of the following best explains the effect on the labor market? O A. The increase in the wage rate will cause the supply of labor to increase, and thus employment will increase. O B. The minimum wage is below the equilibrium wage, so there is no effect on the labor market. O C. The wage rises to $10.88, the quantity of labor demanded increases, and employment increases. D. The wage will rise to more than $10.88 due to the resulting shortage of labor, and thus there will be no unemployment. OE. The wage rises to $10.88, the quantity of labor demanded decreases, and there is now unemployment.
Chapter10: Labor Markets And Income Distribution
Section: Chapter Questions
Problem 3SQP
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Transcribed Image Text:Consider an economy in which the marginal product of labor, MPN, is:
MPN 500 -2N, where N is the amount of labor used.
he amount of labor supplied, NS, is given by:
NS = 18 + 10w + 3T, where w is the real wage, and Tis a lump-sum tax levied on individuals.
Suppose that T= 41.
The equilibrium value of employment is
(round your answer to two decimal places).
The equilibrium value of the real wage is (round your answer to two decimal places).
Suppose in this situation, the government passes minimum-wage legislation that requires firms to pay a real wage greater than or equal to $10
Which of the following best explains the effect on the labor market?
O A. The increase in the wage rate will cause the supply of labor to increase, and thus employment will increase.
O B. The minimum wage is below the equilibrium wage, so there is no effect on the labor market.
C. The wage rises to $10.88, the quantity of labor demanded increases, and employment increases.
O D. The wage will rise to more than $10.88 due to the resulting shortage of labor, and thus there will be no unemployment.
O E. The wage rises to $10.88, the quantity of labor demanded decreases, and there is now unemployment.
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