Question

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Consider the following labor supply and demand curves. For cach of the following situations, show and explain what would happen to the labor market. The firms who are employing these workers experience a big increase in the demand for their product. Wage w D 0 Quantity b) Intel develops a new computer chip that is capable of doing the same work as two employees. Assume that workers and computers are substitutes in Intel's production function Wagel wr Quantity cA newly elected US president issues an executive order, restricting all immigration into the US. Wage S D Quantity The NJ State legislature passes a law, and the governor signs it, to increase the minimum wage in the state. Wage Quantity eCongress passes a law with a mandatory retirement age of 60 years old Wage Quantity

this all what the teacher gave me

Answer 1

a. If there is an increase in demand for the product, the firm would need to increase the product's supply. This would lead to an increase in labor demand. The labor demand curve would shift to the right and equilibrium wages would increase along with an increase in employment.

b. This would lead to a decrease in labor demand which shifts the labor demand curve to the left. This decreases the wage rate and employment.

c. If immigration is restricted, labor supply would fall which shifts the labor supply curve to the left. This increases the equilibrium wage rate and decreases employment.

d. When minimum wage is increased, there can be two scenarios. If the new minimum wage is below the equilibrium wage, there would be no change in the labor market. If the new minimum wage is above the equilibrium wage, there would be excess supply of labor in the market. The new equilibrium wage would be greater than the original wage and the new equilibrium level of employment would be lower.