Homework (Ch 06) The following graph shows the labor market in the fast-food Ind

Question

Homework (Ch 06) The following graph shows the labor market in the fast-food Industry in the fictional town of Supersize City. Use the graph Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Graph Input Tool Market for Labor in the Fast Food Industry 20 Wage (Dollars per hour) Labor Demanded workers) 16 480 abor Supliled200 Supply o 80 100 240 320 400 480 560 640 720 800 LABOR (Thousands of workers) 24

Explanation / Answer

Equilibrium is determined where demand and supply curves of labour intersect each other.

Equilibrium wage=10 and quantity=400

Minimum wage of $8 is a wage floor because it this is minimum wage that would be offered and is below the equilibrium level of wage rate.

Upward pressure-wage rate needs to rise to restore equilibrium.

Downward pressure-wage rate needs to fall to restore equilibrium.

A wage rate of $10 is binding because it is set above the equilibrium wage rate.

Please rate the answer.

Wage Labour demand Labour supply Pressure 6 560 0 Upward 14 240 800 downward

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