Question

Suppose the table represents the labor market of Palau Wage (sh 7.00 7.50 8.00 8.50 9.00 ur) Quantity of laborDe anded (# of workers) 38, 000 36,000 34, 000 32,000 0,000 Quantity of Labor Supplied (ld workers) 34,000 36, 000 38, 000 39,000 40, 000 If Palau enacts a minimum wage of $8.50 per hour, the labor market will experience O neither a shortage nor a surplus since the minimam wage is not binding. O a shortage of 4,000 workers. a surplus of 3,000 workers. a shortape of 7,000 workers. O a surplus of 7,000 workers

Answer 1

When the minimum wage rate is 8.50, it is greater than the market wage rate of 7.50. Hence there is a surplus of workers or shortage of jobs. This is equivalent to 39000 - 32000 = 7000 workers being unemployed.

Select last option (a surplus of 7000 workers)