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 change accordingly Graph Input Tool Market for Labor in the Fast Food Industry 20 Wage (Dolars per hour) Labor Demanded (Thousands of workers) 18 Supp 16 Labor Supplied (Thousands of workers) 300 200 2 12 10 and 0 50 100 150 200 250 300 350 400 450 500 LABOR (Thousands of workers) In this market, the equilibrium hourly wage is $ , and the equilibrium quantity of labor is thousand workers Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a

Explanation / Answer

Wage = 8

Labour demand = 300

Labour supplied = 300

Equilibirum = 300

Wage = $8( Price floor)

Wage       Labour Demanded     Labour Supplied   Pressure on Wages

14             150                               350                             Downward

6               350                               150                             Upward

True

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