iscrms/mod/bilvi · My Grades-2018 Sprin. 147 Jun Print Calculalo n 18 ol 21 Sapl
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iscrms/mod/bilvi · My Grades-2018 Sprin. 147 Jun Print Calculalo n 18 ol 21 Sapling Learning In the hypothetical labor market displayed below, productivity increases from DO to D1 and again from D1 to D2 At this point, productivity no longer increases, but wage incréases to point P. Using this information, answer the questions below 20 13 15 How many workers will find themselves d if the wage continues to increase D2 to point D1 14 Do Number e(S/Hour) 12 3Million Workers 10 Which of the f must occur for the shift to point P to happen? 1 2 4 5 Labor Quantty (n 1o 11 12 13 14 15 Productivity stops increasing unexpectedly Firms assume productivity will continue to follow the same upward trend Firms assume workers will leave the market if wage is not increased Previous Give Up &View; Salulion Check Arswer NextEExplanation / Answer
Unemployment results from minimum wage which is the case here. The wage at P signifies that quantity of labor supplied is 8 million. At this wage the relevent demand function is D2 and at a wage of $15 (determined by P), quantity demanded of labor is 5 million.
Hence a total of 3 million workers are unemployed when the wage is fixed at P. We see that there is no further shift in the demand for labor (productivity). However, if we were to shift to point P, we can assume that firms will pay a higher wage only when the productivity is expected to increase
Correct choice is firms assume productivity will continue to follow the same upward trend
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