The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
4. Minimum wage legislation Part 3
The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
Transcribed Image Text:Graph Input Tool
Market for Labor in the Fast Food Industry
20
18
I Wage
(Dollars per hour)
6
16
Supply
Labor Demanded
(Thousands of
workers)
Labor Supplied
(Thousands of
workers)
560
14
12
10
Demand
80 160 240 320 400 480 560 640 720 800
LABOR (Thousands of workers)
In this market, the equilibrium hourly wage is
$10, and the equilibrium quantity of labor is
400 thousand workers.
Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a price floor
For each of the wages listed in the following table, determine the quantity of labor demanded, the quantity of labor supplied, and the direction of
pressure exerted on wages in the absence of any price controls.
Wage
Labor Demanded
Labor Supplied
(Dollars per hour) (Thousands of workers) (Thousands of workers)
Pressure on Wages
12
Downward
8
Upward
True or False: A minimum wage below $10 per hour is not a binding minimum wage in this market.
O True
O False
WAGE (Dollars per hour)
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