I appreciate your help, Thank you Quantity (thousands of workers per month) Supp

Question

I appreciate your help,

Thank you

Quantity (thousands of workers per month) Suppose the demand and supply of labor in your town is given in the accompanying graph. What is the equilibrium wage per hour and quantity of workers hired per month? What is the value of consumer surplus, producer surplus, and economic surplus in equilibrium? Suppose the government institutes a minimum wage of $7.00 per hour in this market. What will be the new quantity of labor demanded, quantity of labor supplied, and quantity of labor hired in this market? What is the value of consumer surplus, producer surplus, economic surplus, and deadweight loss when the minimum wage is imposed on this market? Which parties in the market win and which lose form the imposition of the new wage?

Explanation / Answer

A)

that point is equilibrum at which both demand and supply curve meet. so the equilibrum wage is $4 per hour and quantity of worker hired is 200,000 per month

B) At equilibrium point Consumer surplus, Producer surplus all are 0.

C) Demand of labour = 50,000

Supply of labour = 350,000

quantity of labour hired = 50,000

D) when the minimum wage is imposed then

consumer surplus= 50,000*1/2=25,000

producer surplus=50,000*7/2=175,000

deadweight loss=300,000*4 - 50,000*7=800,000-350,000=450,000

E)

SInce there is producer surplus. Consumer wins and Producer looses.

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