Due Tomorrow at 1 PM MST Graph Input Tool Market for Labor 24 21 t 18 t 15 12 Wa

Question

Due Tomorrow at 1 PM MST Graph Input Tool Market for Labor 24 21 t 18 t 15 12 Wage (Dollars per hour) 3.00 Labor Demanded (Thousands of workers) 1,050 abors Suppilio 150 workers) 0 150 300 450 600 750 900 1050 1200 LABOR (Thousands of worers) Complete the following table with the quantity of labor supplied and demanded if the wage is set at $15.00. Then indlicate whether this in a shortage or a surplus Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Labor Demanded Labor Supplied (Thousands of workers) Wage (Thousands of workers) Shortage or Surplus? $15.00

Explanation / Answer

(1) When Wage = $15,

Labor demanded = 450 (Thousand)

Labor supplied = 750 (Thousand)

Since Labor demanded < Labor supplied, there is a Surplus.

(2) Minimum wage of $15 is higher than free-market equilibrium wage ($12). The following are true:

- If minimum wage is $11.5, market will still reach equilibrium (Since this minimum wage is not binding).

- In labor market, minimum wage of $15 is binding (Since it is higher than free-market equilibrium wage).

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