Wage Labor Demanded Labor Supplied (Dollars per hour) (Thousands of workers) (Thousands of workers) Surplus or Shortage of Labor Pressure on Wages 12 Upward rue or False: A minimum wage below $10 per hour is a binding minimum wage in this market. (Hint: Economists call a n Downward that prevent ne labor market from reaching equilibrium a binding minimum wage.) True False
The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. In a labor market, workers supply their labor to the market in exchange for wages, and their behavior is represented by the supply curve. Similarly, firms pay wages to obtain labor, and thus their behavior is represented by the demand curve. In this way, wages are the price of labor.
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.
True or False: A minimum wage below $10 per hour is a binding minimum wage in this market. (Hint: Economists call a minimum wage that prevents the labor market from reaching equilibrium a binding minimum wage.)
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