The accompanying graph shows the labor market in the country of Harmonia. Assume that the Harmonia labor market is in equilibrium the Harmonian government decides to enact a minimum wage of $6. a. Show the new minimum wage on the graph by shifting the minimum wage line. b. What is the increase in unemployment as a result of the minimum wage? million c. Which type of unemployment is affected by the new minimum wage? structural unemployment frictional unemployment cyclical unemployment Wage Rate ($/hour) 10 9 8 7 3 2 1 0 Labor Market L S Minimum Wage L D 20 40 60 80 100 120 140 160 180 Quantity of Labor (millions of workers) 200
The accompanying graph shows the labor market in the country of Harmonia. Assume that the Harmonia labor market is in equilibrium the Harmonian government decides to enact a minimum wage of $6. a. Show the new minimum wage on the graph by shifting the minimum wage line. b. What is the increase in unemployment as a result of the minimum wage? million c. Which type of unemployment is affected by the new minimum wage? structural unemployment frictional unemployment cyclical unemployment Wage Rate ($/hour) 10 9 8 7 3 2 1 0 Labor Market L S Minimum Wage L D 20 40 60 80 100 120 140 160 180 Quantity of Labor (millions of workers) 200
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The accompanying graph shows the labor market in the country of Harmonia. Assume that the Harmonia labor market is in equilibrium the Harmonian government decides to enact a minimum wage of $6.
A. Show the new minimum wage on the graph by shifting the minimum wage line.
B. What is the increase in unemployment as a result of the minimum wage?
C. Which type of unemployment is affected by the new minimum wage?
C. Which type of unemployment is affected by the new minimum wage?
Transcribed Image Text:Macmillan Learning
The accompanying graph shows the labor market in the
country of Harmonia. Assume that the Harmonia labor
market is in equilibrium the Harmonian government decides
to enact a minimum wage of $6.
a. Show the new minimum wage on the graph by shifting the
minimum wage line.
b. What is the increase in unemployment as a result of the
minimum wage?
million
c. Which type of unemployment is affected by the new
minimum wage?
structural unemployment
frictional unemployment
O cyclical unemployment
Wage Rate ($/hour)
10
9
8
7
CO
6
3
2
1
0
0
20
Labor Market
S
Minimum Wage
40 60 80 100 120 140 160
Quantity of Labor (millions of workers)
D
180 200
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