31. What is the price elasticity of demand at equilibrium? e. 1.5 Now suppose th

Question

31. What is the price elasticity of demand at equilibrium? e. 1.5 Now suppose the government of Alberta decided to have a "price support program" with a minimum wage set at W- S 12 per hour and promises to buy any excess supply of labor services 32. Given this price support program (minimum wage of 12 S), what is the total cost to the government? a. 50 48 c. 58 d. 60 e. 65 33. Suppose, instead, the government decides to have a “government subsidy program" with a guaranteed (or target) wage of W= $ 12, What is the total cost to the government? a. 58 b. 38 c. 18 d. 10 e. 28

Explanation / Answer

Subsidy = 12-(15-7) =4

Wage paid by employers = 15-7 =8

Total cost to government = 4*7 =28

hence the correct option is e.

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