In 2010, many unskilled workers in the United States earned the Federal minimum
ID: 1100693 • Letter: I
Question
In 2010, many unskilled workers in the United States earned the Federal minimum wage of $7.25 per hour. By contrast, average earnings in 2010 were about $18.00 per hour, and certain highly skilled professionals, such as doctors and lawyers, earned $160.00 or more per hour.
a. If we assume that wage differences are caused solely by differences in productivity, how many times more productive was the average worker than a worker being paid the Federal minimum wage?
Instructions: Round your answer to two decimal places.
times more productive than a minimum wage worker
How many times more productive was a $160-per-hour lawyer compared to a worker earning minimum wage?
Instructions: Round your answer to two decimal places.
times more productive than a minimum wage worker
b. Assume that there are 20 minimum-wage workers in the economy for each $160-per-hour lawyer. Also assume that both lawyers and minimum-wage workers work the same number of hours per week. If everyone works 40 hours per week, how much does a $160-per-hour lawyer earn a week?
$ per week
How much does a minimum-wage worker earn a week?
$ per week
c. Suppose that the government pairs each $160-per-hour lawyer with 20 nearby minimum-wage workers. If the government taxes 25 percent of each lawyer
Explanation / Answer
a. If we assume that wage differences are caused solely by differences in productivity, how many times more productive was the average worker than a worker being paid the Federal minimum wage?
Answer: 18/7.25 = 2.48 times
How many times more productive was a $160-per-hour lawyer compared to a worker earning minimum wage?
Answer: 160/7.25 = 22.07 times
b. If everyone works 40 hours per week, how much does a $160-per-hour lawyer earn a week?
Answer: 40*160 = $6400 per week
How much does a minimum-wage worker earn a week?
Answer: 40*7.25 = $290 per week
c. How much will each of those minimum-wage workers receive each week?
Answer: (0.25*6400)/20 = $80 each week
How much does each minimum-wage worker
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