Question

CENGAGE MINDTAP DILDO DUN0351182SBA Homework (Ch 15) Graph Input Tool Market for Labor Supply 3.00 Wage (Dollars per hour) Labor Demanded (Thousands of workers) 1,050 Labor Supplied (Thousands of workers) 150 WAGE (Dollars per hour) Demand 0 150 300 450 600 750 900 1050 1200 LABOR (Thousands of workers) Complete the following table with the quantity of labor supplied and demanded If the wage is set at $9.00. Then indicate whether this wage will resur

Answer 1

At wage = $9, labor demanded = 750 and labor supplied = 450.

As, quantity of labor demanded is greater than quantity of labor supplied, therefore there is a shortage of labor.

A minimum wage is a price floor, which means wage rate can't fall below that minimum wage. If minimum wage is set below the equilibrium wage, then the market can easily operate at the equilibrium and therefore it won't be a binding minimum wage. But if the minimum wage rate is set above the equilibrium level, then it will prevent the labor market from reaching equilibrium, thus it will act as binding minimum wage.

A binding minimum wage causes labor surplus. The unemployment caused by this minimum wage is structural uneployment.

In the absence of price control, labor shortage means firms will increase wage rate to hire more labors and labors would expect higher wage rate from the firms because of labor shortage. Therefore, it will put an upward pressure on the wage rate.

Therefore, statement 2 and statement 4 are True.