Question 12 of 20 Map A sapling Please adjust the graph to show the impact of a

Question

Question 12 of 20 Map A sapling Please adjust the graph to show the impact of a recession, where the theoretical market equilibrium wage rate falls to S10 an hour. Then answer the two questions to the right of the graph, but assuming wages are sticky downward Wage Rate (Per Hour) After the effects of the recession are felt, what 28 is the size of the increase or decrease in unemployment? 26 Number 22 Million People What is the actual wage rate that predominates in the market? Number 3 14 15 Labor Quantity (In Millions of Workers) If you need to reset the graph to its original state, click on the graph, and then click on the button that looks like this A O Previous ® Give Up & View Solution Check Answer Next HExitu Hint

Explanation / Answer

I cannot generate an interactive graph as the one you have shown, but answers to your questions are:

1) Equilibrium wage rate = $10

When wage = $10, labor demand = 11 but labor supply = 8

Labor demand > Labor supply, so unemployment will decrease by (11 - 8) = 3 million

2) The market wage rate is $14 (at intersection of labor demand & supply curves)

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