WAGE (Dollars per hour) 175 150 12.5 10.0 75 5.0 25 0 0 Supply Demand 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers) Wage (Dollars per hour) Labor Demanded (Thousands of workers) Which of the following statements are true? Check all that apply. 2.50 875 Labor Supplied (Thousands of workers) Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Labor Demanded Labor Supplied Wage (Thousands of workers) (Thousands of workers) Shortage or Surplus? $12.50 375 625 Surplus Suppose the federal government contemplates a new law that would create a national minimum wage of $12.50 per hour. 125 In the absence of price controls, a surplus puts upward pressure on wages until they rise to the equilibrium. Binding minimum wages increase the natural rate of unemployment. In this labor market, a minimum wage of $12.50 would be binding. If the minimum wage were set at $9.50, the market would still be able to reach equilibrium.

WAGE (Dollars per hour) 175 150 12.5 10.0 75 5.0 25 0 0 Supply Demand 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers) Wage (Dollars per hour) Labor Demanded (Thousands of workers) Which of the following statements are true? Check all that apply. 2.50 875 Labor Supplied (Thousands of workers) Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Labor Demanded Labor Supplied Wage (Thousands of workers) (Thousands of workers) Shortage or Surplus? $12.50 375 625 Surplus Suppose the federal government contemplates a new law that would create a national minimum wage of $12.50 per hour. 125 In the absence of price controls, a surplus puts upward pressure on wages until they rise to the equilibrium. Binding minimum wages increase the natural rate of unemployment. In this labor market, a minimum wage of $12.50 would be binding. If the minimum wage were set at $9.50, the market would still be able to reach equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A10
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