Question

3 Peru D 02 4 68 10 12 14 Quantity The figure above illustrates the current market for workers in Lima, Peru 1. Without any government intervention, what is the equilibrium wage rate and amount of employment? L 2. Shade and compute the Consumer Surplus (CS) and Producer Surplus (PS). Careful: consumer surplus here is surplus to the FIRMS hiring the workers; producer surplus is the surplus that accrues to the workers supplying their work CS PS 3. If the city government imposes a minimum wage of $3 an hour (a) Does the minimum wage bind?Yes (b) What is the new amount of employment, L2? No Yes (e) Does the minimum wage create any unemployment? ment, if applicable? What is the amount of unemploy No 4. This time shade and compute the Consumer Surplus (CS), Producer Surplus (PS), and Deadweight Loss (DWL) under the $3 minimum wage regime CS PS2 DW L 5. If the city government imposes a minimum wage of S6 an hour, (a) Does the minimum wage bind?Yes No (b) What is the new amount of employment, L? No What's the amount of unemployment, (c) Does the minimum wage create any unemployment? if applicable? Yes inoy ad upap alo

Answer 1

a wage = 4 4 employment 58 Дься, а дуч за от Psi= tx 4x8=16 3) Minimum wage = $3 No b) ( minimum woge dognot bind. 22=8 No mincnum wag I any to doesnot crect ane unemployment = c.s. pre=P.S. DWL₂=0 El men, wage - $6 /hom a) Yes, minimum wage bend b) L3=4 c) Unemplogen = 12-4=8