The graph shows the market for apple pickers in New England. Wage rate (dollars

Question

The graph shows the market for apple pickers in New England. Wage rate (dollars per hour) 17.50 If the New England states introduce a minimum wage for apple pickers of $14.00 an hour, how many pickers are employed and how many are unemployed? If the New England states introduce a minimum wage for apple pickers of $14.00 an hour, pickers are employed and pickers are unemployed The lowest wage that some workers might be able to earn if a black market develops is 14.00 10.50 7 00 3.50 2000 3000 4000 5000 6000 Quantity (pickers)

Explanation / Answer

Answer

The minimum wage is effective when it is above equilibrium wage

the equilibrium is at D=S

where

L=4000 and wage=10.5

at wage=14

Labor demanded=3000 and supplied= 5000

so

employed=3000 and unemployed=supplied-demanded=5000-3000=2000

if the black market exits lowest wage will be equal to equilibrium wage and that is $10.5

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