The graph below shows the labor market in the country of Harmonia. You may use t

Question

The graph below shows the labor market in the country of Harmonia. You may use the graph to help answer the questions that follow, but the graph is not graded. Assume that Harmonia labor market is at the market equilibrium before any of the scenarios below occur. Assume that all unemployed workers who are willing to work at the current wage in Harmonia are actively looking for work. You may manipulate the graph above to help answer the questions, but the graph is not graded. The Harmonian government decides to introduce a minimum wage of $6. What will be the total increase in unemployment as a result? Trade unions in Harmonia negotiate with companies to set a wage of $8 across the country. What will be the total increase in unemployment as a result (increase from equilibrium, not $6)? The above scenarios result in increases in:

Explanation / Answer

1) 40

2) 120

3) Structural

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