--%>
Assignment Help - homework help

Problem on Minimum Wage

Sec. A:The Bureau of Labor Statistics of a small state has asked you to analyze a minimum wage policy to support unskilled workers in the State’s local economy, which is still suffering from the effects of the recession.  Based on information that you’ve gathered, where “P” represents the hourly wage of unskilled workers, you’ve estimated that the demand for unskilled labor (QD) across the State is as follows:

QD = 1,000,000 – 40,000 P
Unskilled labor (QS) = -200,000 + 200,000 P

Answer the following questions about this competitive market for unskilled labor. In both cases, show your work.

1. A local legislator is concerned about the relatively low earnings of unskilled workers, and proposes a minimum hourly wage of $6.00.  Showing your work, explain how this would effect:

a. The number of unskilled workers employed
b. The number of unskilled workers who would be unemployed

2. Explain both the efficiency and equity consequences of the $6.00 minimum wage policy for unskilled workers.  Include charts supporting your answer.

Sec. B: Answer each of the questions below and illustrate your answers using supply and demand diagrams.In answering, assume that the market is initially in equilibrium, and that there is no minimum wage. Do not use the supply and demand equations in Section A Remember that in a labor market, demand depends on the behavior if potential employers, and supply depends on the decisions of potential workers.

1. The State experiences a significant immigration of unskilled workers.

2. Technological change makes it possible for computers to do at a relatively low cost a significant amount of work previously done by unskilled workers.

3. The system of adult education in the State provides previously unskilled workers with skills enabling them to compete for relatively high paying, skilled jobs.

   Related Questions in Microeconomics

  • Q : Problem on demand-Purchasing goods I

    I have a problem in economics on demand-Purchasing goods. Please help me in the following question. The quantity of good consumers will purchase beneath different conditions are termed as consumer: (i) Requirements. (ii) Entitlements. (iii) Wants. (iv

    		•
  • Q : Problem on certainty of punishment

    Raising the severity and certainty of punishment decreases the cheating on examinations. This statement imitates: (1) Misplaced cynicism as this issue is ethical, not economic. (2) Purely normative views of the behavior. (3) Unrealistic expectations regarding student

    		•
  • Q : Words of Frank Knight In words of Frank

    In words of Frank Knight, risk, not like uncertainty: (w) is totally unpredictable. (x) is a main source of pure economic profits. (y) may be estimated. (z) cannot be taken into account while firms make decisions regarding production and pricing.

    		•
  • Q : Simulated demand A department store

    A department store faces a decision for a seasonal product for which demand can be high, medium or low. The purchaser can order 1, 2 or 3 lots of this product before the season begins but cannot reorder later. Profit projections (in thousands of euro) are shown below:

    		•
  • Q : Regulatory barrier to entry Billy

    Billy recently invented and in that case patented a motorized flying skateboard which transports people to and from their destinations in less than half the time this would take to ride or drive a bus. Billy is protected from competition from a: (1) regulatory barrier

    		•
  • Q : Define Optimal Sample Size Optimal

    Optimal Sample Size: The optimal or suitable size of sample in a survey or poll is the function of four discrete factors: 1. Size of the population: The size of the

    		•
  • Q : Problem on least monopsony power The

    The Firms which have at least some monopsony power will never: (i) Practice wage discrimination. (ii) Find out wage rates in portion by the number of workers it hires. (iii) Pay higher wages than would a firm hiring from the competitive labor market. (iv) Raise the em

    		•
  • Q : Attract new firms by economics profits

    Economic profits within a competitive industry are signals which: (i) attract new firms into the industry. (ii) hinder innovation of new technologies. (iii) encourage inefficiency in existing firms. (iv) business conditions are deteriorating. (v) pric

    		•
  • Q : What demand curve illustrates What

    What demand curve illustrates?

    		•
  • Q : Price charging by minimizing average

    See a monopolist which cannot price discriminate but that maximizes profit. When this firm produces the level of output where is average cost at its minimum that will charge a price: (i) equal to marginal cost and generate zero economic profit. (ii) e

    		•