Question

Consider the market for labor depicted by the demand and supply curves that follow. 

Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. 

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $15.00. Then indicate whether this wage will result in a shortage or a surplus. 

Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.00. 

Which of the following statements are true? Check all that apply. 

 If the minimum wage is set at $15.00, the market will not reach equilibrium. 

 In this labor market, a minimum wage of $11.50 would be binding.

 In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium. 

 Binding minimum wages cause structural unemployment.

Answer 1

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $15.00. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Wage $15.00 Labor Demanded (Thousands of workers) 450 Labor Supplied (Thousands of workers) 750 Shortage or Surplus? Surplus Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.00. Which of the following statements are true? Check all that apply. • If the minimum wage is set at $15.00, the market will not reach equilibrium. In this labor market, a minimum wage of $11.50 would be binding. In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium. Binding minimum wages cause structural unemployment.