Wage $7.25 $6.50 A E B D 45,000 70,000 85,000 S=MC D=MB Minimum wage a (number of workers) The figure above shows a market for workers where employers are the consumers. What is the change in employers surplus after a minimum wage is imposed? a. Employers' surplus decreases by C+ E b. Employers' surplus decreases by B+C c. Employers' surplus increases by B but decreases by E d. Employers' surplus increases by B+D

Wage $7.25 $6.50 A E B D 45,000 70,000 85,000 S=MC D=MB Minimum wage a (number of workers) The figure above shows a market for workers where employers are the consumers. What is the change in employers surplus after a minimum wage is imposed? a. Employers' surplus decreases by C+ E b. Employers' surplus decreases by B+C c. Employers' surplus increases by B but decreases by E d. Employers' surplus increases by B+D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the Labor Market in New York and New Jersey. In both markets Demand is given by w = 1000-2E. Assume New York has a perfectly inelastic supply of 400 workers and New Jersey has perfectly inelastic supply of 200 workers. a. Graph the two markets and find the equilibrium wage in each market. b. With costless mobility across markets what would the long-run wage in each market. Show this in your graphs. c. Instead, assume that there are still 400 workers in New York and 200 in New Jersey but now the cost of moving is $ 100. What will be the long-run wage in each market? Explain
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Would consumers have to pay the price for increasing minimum wage?
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