Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 7, Problem 7IAPA
To determine
To explain:
The effects of the higher minimum wage on the workers' surplus and the firm's surplus and whether the wage of $15 brings fairness, dignity and respect.
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Wage
$12
$11
$10
$9
$8
$7
$6
$5
$4
$3
$2
$1
T
S
Tools
/
$5.50
D
0
1
2
3
4
5 6 7 8 9 10
Labor
$6.50
■. The government introduces a minimum wage of $5.50. Draw a horizontal
ne to identify the minimum wage on the graph.
n the news on Saturday, October 3d, 2020
Geneva voted by a two-thirds majority to introduce a minimum wage of 23 Swiss francs ($25) an hour
for a 41-hour work week. That adds up to somewhere in the range of $4,100 a month, or $53,300
annually. The Geneva minimum wage is the highest minimum wage ever.
In comparison, the federal minimum wage in the US is $7.25 an hour. Across the Swiss border, in
France, the minimum wage is half Geneva's minimum wage (i.e, assume the French minimum wage
is $12.50 an hour).
The measure will be executed this month, according to an organization representing the cross-border
workers of France and Switzerland. "With these votes, Geneva has managed to maintain its
attractiveness by rejecting the closure of borders and adopting a minimum wage," the group wrote in
a brief post, lauding the decision and stating that the opposite outcome "could have jeopardized the
free movement of nearly 200,000 cross-border workers." Opponents of the new minimum wage
argued that…
Chapter 06 News Analysis: Should the Minimum Wage Increase?
15
Labor Market
WAGE (Dollars per hour)
12
0
0
200
400
600
Labor Supply
+
Wage Rate
(Dollars per hour)
$11.7
Labor Demanded
220
Labor Supplied
780
(Thousands of
workers)
(Thousands of
workers)
Surplus Labor
560
(Thousands of
workers)
Labor Demand
Labor Demand Shifters
Tax Credit
0
(Dollars per hour)
800
1000
QUANTITY (Thousands of workers)
Suppose the minimum wage in this economy is $11.70 per hour. An unemployed worker is defined as someone who is willing to work at the prevailing
wage but is unable to find employment. Because the minimum wage lies above the equilibrium wage, it is binding, which means it is also the
prevailing wage.
If the wage is not allowed to fall below $11.70 per hour, the size of the unskilled labor force is
workers are considered unemployed.
workers, and
unskilled
The unemployment rate is defined as the percentage of unemployed workers in the labor force:
Unemployment Rate =
Labor Force
Unemployed x…
Chapter 7 Solutions
Foundations of Economics (8th Edition)
Ch. 7 - Prob. 1SPPACh. 7 - Prob. 2SPPACh. 7 - Prob. 3SPPACh. 7 - Prob. 4SPPACh. 7 - Prob. 5SPPACh. 7 - Prob. 6SPPACh. 7 - Prob. 7SPPACh. 7 - Prob. 8SPPACh. 7 - Prob. 9SPPACh. 7 - Prob. 10SPPA
Ch. 7 - Prob. 11SPPACh. 7 - Prob. 1IAPACh. 7 - Prob. 2IAPACh. 7 - Prob. 3IAPACh. 7 - Prob. 4IAPACh. 7 - Prob. 5IAPACh. 7 - Prob. 6IAPACh. 7 - Prob. 7IAPACh. 7 - Prob. 8IAPACh. 7 - Prob. 9IAPACh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - Prob. 3MCQCh. 7 - Prob. 4MCQCh. 7 - Prob. 5MCQCh. 7 - Prob. 6MCQCh. 7 - Prob. 7MCQCh. 7 - Prob. 8MCQ
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- Table 28-4 The following data is about the labor market in the city of Productionville. Wage Quantity Demanded Quantity Supplied (Dollars per hour) (Units) (Units) 8 6,000 16,000 7 9,000 14,000 6 12,000 12,000 5 15,000 10,000 4 18,000 8,000 Refer to Table 28-4. If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed? О а. 3,000 O b. 10,000 О с.0 O d. 2,000arrow_forward$30 a week boost to minimum wage The government increased the minimum wage by $30 a week to $570 a week. Unions wanted a $35 a week increase, but employers argued that a $35 a week increase was unaffordable. Source: ABC Australia, February 11, 2011 The graph shows a market for low-skilled labor. If the minimum wage is set at $570 a week, If the minimum wage is set at $540 a week, O A. everyone who wants a job has one; firms cannot hire all the labor they want OB. firms cannot hire all the labor they want; everyone who wants a job has one OC. everyone who wants a job has one; some people who want a job can't get one OD. some people who want a job can't get one; everyone who wants a job has one M 590- 580- 570- 560- 550- 540- 530- 520- 510- 9.8 Wage rate (dollars per week) D S 9.9 10 10.1 10.2 Quantity (millions of hours per year) O J Nextarrow_forwardUse the table below to answer the following questions. Select one: OA. 30 OB. 40 Wage Rate (dollars per hour) 7 6 C. zero D. 70 E. 20 4 3 Table 6.2.2 Quantity Supplied (millions of hours) 88888 50 40 30 20 Refer to Table 6.2.2. What is the level of unemployment in millions of hours if the minimum wage is set at $3 per hour? Quantity Demanded (millions of hours) 30 40 50 60 70arrow_forward
- Please help me with graph 20arrow_forwardThe minimum wage originally was only 25 cents an hour. Today it is $7.25 an hour. Assume that Congress is considering raising the minimum wage again and your U.S. representative is asking for public opinion on this issue. Write a letter to your representative with arguments for and against a higher minimum wage.arrow_forward$30 a week boost to minimum wage The government increased the minimum wage by $30 a week to $570 a week. Unions wanted a $35 a week increase, but employers argued that a $35 a week. increase was unaffordable. Source: ABC Australia, February 11, 2011 The graph shows a market for low-skilled labor. If the minimum wage is set at $570 a week, If the minimum wage is set at $540 a week, OA. some people who want a job can't get one; everyone who wants a job has one B. firms cannot hire all the labor they want; everyone who wants a job has one OC. everyone who wants a job has one; firms cannot hire all the labor they want OD. everyone who wants a job has one; some people who want a job can't get one 590- 580- 570- 560- 550 540- 530- 520- 510+ 9.8 Wage rate (dollars per week) A D 9.9 10.1 10 Quantity (millions of hours per year) S 10.2 Next Q Q Garrow_forward
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