3. Technalagy and minimum wages Improvements in computer technokgy tend to ino e

Question

3. Technalagy and minimum wages Improvements in computer technokgy tend to ino ease the wage gap between high-skilled and ow-skiled workers. Seme pelicymzkers want to ino ezse the minimum wage in erder to reduce the gzp between highr and low-paid According to the authar, raising the minimum ge might creabe same une ployment at the entry lewel to the labor force. The minimum wage is a cassic example of a price fear. Yau may have already covered the effects of price Hoors. Take a mement to review the possble consequences of a wage fear in the following problems Suppose the graph in the tollwing calcu ator represents the market for low-sklled labor in Florida. Ue the caloulator to solve the fo lowing probles Tool bp: Use your mouse to drag the green line on the graph. The values in the baxes an the right side of the cakculator will change accordingy You can alse directty change the values in the baxes with the white background by dicking in the box and typing, When you dick the Calcu ate button, the graph and ay related values will change accordingly Wage uantity Demanded Quantity Sappid Surplus In the absence of govermment interwention, the equilbrium wage b and Fonda firma employ Now, suppose the Fonda legislature mandates a minimun wage ef $9.00 per heur. If legaly cbig,ted to pay workors a mnimum af S9.00 per hour, Flor da frms wil hre morkers An unemployed worker is one "ho woud ike to work at the prevai'ng wage but cannot find a jeb. In the·bor market, surplus laber represents unempleyment At a minimum wage of 9.00 per hour, how many low-skiled worker's are unemp oyed? O 320,000 O 400,000 O 180,000 500,000

Explanation / Answer

(a) In absence of intervention, equilibrium is at intersection of labor demand and supply curves.

Equilibrium wage = $7.5

Firms employ 400,000 workers.

(b) When minimum wage = $9,

Firms will hire 300,000 workers (From labor demand curve).

(c) When minimum wage = $9,

Workers seeking job = 480,000 (From labor supply curve).

Unemployment = 480,000 - 300,000 = 180,000

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.