Question

 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.

 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 $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.

 True or False: A minimum wage below $10 per hour is not a binding minimum wage in this market.

•  True

•  False

Answer 1

Solution:-

In this market, the equilibrium wage is $ 10 and the equilibrium quantity 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.

Wage	Demand	Supply	Pressure on Wage
8	165	135	on to the upward side
12	135	165	on to the downward side

Hence it is False because minimum wages above $10 are binding because the market wages are $10 per hour.