Map Sapling Learning Use the graph below showing short-run supply and demand, lo

Question

Map Sapling Learning Use the graph below showing short-run supply and demand, long-run supply and demand and a binding minimum wage to answer the following questions 50 How may people are unemployed in the short-run? 45 Supply (short-run) Number 40 Supply (ong-run) workens 35 Minimum wage 30 25 20 15 10 How may people are unemployed in the long-run? Number Demand (long-run) Demand (short-run) wo rkers 0 100 200 300 400 500 600 700 800 900 1000 Quantity of workers Note: This graph is for reference only. Previous Check Answer() Next Hint

Explanation / Answer

When a minimum wage is a binding constraint then the number of workers employed is determined by the demand side.

Short Run

Demand for Labour (D) = 400

Supply of Labour (S) = 700

Therefore Unemployment = S - D

= 700 - 400

= 300 (Answer)

Long Run

Demand for Labour (D) = 300

Supply of Labour (S) = 800

Therefore Unemployment = S - D

= 800 - 300

= 500 (Answer)

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