2. Minimum wage legislation The following graph shows the labor market in the fa

Question

2. Minimum wage legislation

The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

In this market, the equilibrium hourly wage is _____, and the equilibrium quantity of labor is _______ thousand workers.

Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a (Price Floor, Tax, Price Ceiling, Quota).

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.

(options for Pressure on Wages are: downward and upward)

Graph Input Tool Market for Labor in the Fast Food Industry 20 18 16 14 12 Wage (Dollars per hour) Labor Demanded workers Supply 480 Labor Supplied 200 workers and 0 80 160 240 320 400 480 560 640 720 800 LABOR (Thousands of workers)

Explanation / Answer

In this market, the equilibrium hourly wage is $10, and the equilibrium quantity of labor is 400 thousand workers.

( the market wage and quantity is determined by the intersection of price and quantity.)

Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a price floor.

price floor is the minimum price that has to be paid to the labourer. It is effective only when it is above the equilibrium price.

true or false: answer is false.

for a price ceiling to be binding it has to be placed above the equilibrium price that is $10 per hour.

wage($ per hour) demand (thousands od worker) supply (thousands od worker) pressure on wage 6 560 0 upward 14 240 800 downward

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.