Figure 1 above shows the demand and supply curves in the market with a minimum w

Question

Figure 1 above shows the demand and supply curves in the market with a minimum wage set at $8, per hour. Use the graph to answer the following questions:

1) How many workers will be unemployed due to the minimum wage? ___________

2) What kind of unemployment is this? _____________________

3) What would happen to the quantity of Labor demanded and supplied if the minimum wage were

less than $6? ___________________

4) Who are the winners and the losers when the minimum wage is $8?

5) What is wage rigidity? List and explain two factor that can increase wage rigidity in the labor market.

6) Explain weather this individual will be counted as part of the labor force: Kristin left her full time job as a journalist to be home with her children and now makes some income working part-time for a children’s magazine

Part Part 1: Aplia-Inspired Questions : Aplia-Inspired Questions Labor supply Wage $8 $6 Labor demand Quantity of labor in 000s 500 100 300 Figure 1 above shows the demand and supply curves in the market with a minimum wage set at S8, per hour. Use the graph to answer the following questions:

Explanation / Answer

1) 200

2) frictional employment

3) more unemployment

4) The winners are those 5,00 workers (suppliers of labor) who still have a job but now get paid a higher wage. Their producer surplus is higher than it would have been without the minimum wage. The losers are those workers who would have been working without a minimum wage but now are not working (workers 5,01 to 6,00); also those consumers of workers (the businesses that hire workers) are losers since they now much pay a higher wage and their consumer surplus is lower.

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