MARKET FOR LABOUR Wage rate-2 Labour Demanded(thousands of workers) -417 Labour
ID: 1094697 • Letter: M
Question
MARKET FOR LABOUR Wage rate-2 Labour Demanded(thousands of workers) -417 Labour Supplied (thousands of workers)183 In this market, the equilibrium hourly wage is , and the equilibrium quantity of labour is workers. Suppose a province in Canada enacts a minimum hourly wage of $12. At a wage of $12 per hour, the quantity of labour firms will demand is workers, whereas the quantity of labour workers will supply is workers. Therefore, there will be of workers in this market. In the absence of any price controls, this will exert pressure on wages until the labour market achieves equilibrium. However, with a price control in place, the labour market may or may not be able to reach its equilibrium. (Note: Economists call a minimum wage that prevents the labour market from reaching equilibrium a binding minimum wage.) In this particular case, the minimum wage of $12 per hour prevent the market from reaching the equilibrium you found before and contribute to prolonged unemployment. The minimum wage causes unemployment.Explanation / Answer
a) The equilibrium hourly wage is 9$ and the equilibrium quantity of labor is 300
b) Suppose a province in Canada enacts a minimum hourly wage of $ 12 per hour, the quantity of labor firms will demand is approximately 240 whereas the quantity of labor workers will supply is approximately 370.
Therefore there will be more of supply workers in the market. In the absence of any price controls, this will exert more pressure on wages until the labor market achieves equilibrium. However, with a price control in place, the labor market may or may not be able to reach its equilibrium. (Economists call a minimum wage that prevents the labor market from reaching equilibrium a binding minimum wage). In this particular case, the minimum wage of $ 12 per hour will prevent the market from reaching the equilibrium you found before and may contribute to prolonged unemployment.
The minimum wages causes more unemployment.
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