4. Minimum wage legislation The following graph shows the labor market in the fa

Question

4. Minimum wage legislation The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will c hange accordingly Graph Input Tool Market for Labor in the Fast Food Industry 20 19 16 14 12 10 Wage 6 Dollars per our) Labor Demanded (Thousands of workers) 74 Labor 126 Supplied (Thousands of workers) . 0 30 60 90 120 150 100 210 240 270 300 LABOR (Thousands of workers) , and the equilibrium quantity of In this market, the equilibrium hourly wage is $ labor is thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a For each of the wages listed in the following table, determine the quantity of labor demanded, the quantity of labor supplied, and the direction of pressure exerted on wages in the absence of any price controls Labor Supplied (Thousands of workers) Labor Demanded Wage (Dollars per (Thousands of workers) Pressure on Wages hour 8 12

Explanation / Answer

The equilibrium hourly wage is $10, and the equilibrium quantity of labor is 150 thousand workers.
Suppose a senator introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a price floor.

W

LD

LS

Pressure on wages

8

165

135

Upwards

12

135

165

Downwards

W

LD

LS

Pressure on wages

8

165

135

Upwards

12

135

165

Downwards

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