MINDTAP Homework (Ch 20) d Due Tomorrow at 1 PM MST Market for Labor per hour) L

Question

MINDTAP Homework (Ch 20) d Due Tomorrow at 1 PM MST Market for Labor per hour) Labor Demanded 12 Labor Supplied Thousands of 10 7 0 200 400 600 800 1000 1200 1400 1600 LABOR (Thousands of workens) Complete the following table with the quantity of labor supplied and demanded if the wage s set ot $6.00. Then indicate whether this wage weat in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Labor Supplied Labor Demanded Shortage or Surplus? CThousands of workers) Wage (Thousands of workers) $6.00 Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $6.00

Explanation / Answer

(1) When Wage = $6,

Labor demanded = 1,000 (Thousand)

Labor supplied = 600 (Thousand)

Since Labor demanded > Labor supplied, there is a Shortage.

(2) Minimum wage of $6 is lower than free-market equilibrium wage ($8). The following are true:

- If minimum wage is $6,market will still reach equilibrium (Since minimum wage is not binding).

- In labor market, minimum wage of $8.5 is binding (Since it is lower than free-market equilibrium wage).

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