--%>
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 : Price ceiling If the government puts a

    If the government puts a rent ceiling of $650 a month, what is the rent paid and how many rooms are rented? Explain why?

    		•
  • Q : Increase revenues when price falls When

    When the price elasticity of demand for fried cheesy grits at Pixie’s Breakfast Grill is two, in that case a price cut of $2.80 to $2.00 per serving of grits would be most probably to: (1) reduce Pixie’s revenues from grits by roughly fort

    		•
  • Q : Elastic industry What industry is

    What industry is perfectly elastic that is not agriculture?

    		•
  • Q : Excise tax at highest average rate At

    At the highest average rate an excise tax will tax low incomes while: (1) only luxuries are taxed. (2) goods along with the highest income elasticity of demand are exempt. (3) goods along with the lowest income elasticity of demand are exempt. (4) no

    		•
  • Q : Price elasticities of demand and higher

    Price elasticities of demand tend to as: (i) fall as higher prices are charged. (ii) rise as higher prices are charged. (iii) almost always be constant. (iv) not be associated to the length of time. (v) not be influenced by price changes.

  • Q : Changes in Bonds and Interest Rates

    When you buy a bond if the interest rate is 10% and sell this while the interest rate is 15%, in that case you will receive: (w) less than you paid for the bond. (x) more than you paid for the bond. (y) the same amount which you paid for the bond. (z)

    		•
  • Q : Determine the equilibrium prises When

    When both sellers and potential buyers suppose prices for rider lawn mowers to raise as summer approaches, in that case throughout March and April (in the short run), the equilibrium: (w) price falls but quantity changes are ambiguous. (x) price rises

    		•
  • Q : Problem regarding labor monopsonist The

    The labor monopsonist will hire labor up to the point where the marginal: (1) Revenue product of the labor equivalents the wage. (2) Resource cost of labor equivalents the salary. (3) Revenue product of labor equivalents its marginal resource cost. (4) Resource cost o

    		•
  • Q : Labor markets gain maximization When,

    When, after hiring the very last worker, the organization’s profit is similar as it was before the last worker was hired, then the firm must: (p) Hire more workers to raise the profit. (q) Layoff some workers to raise the profit. (r) Not appoint any more workers

    		•
  • Q : Price above marginal cost to minimizes

    When a monopolist which does not price discriminate maximizes profit and its economic profit is zero, this will charge a price: (w) equal to marginal cost and will be at the minimum average cost. (x) equal to marginal cost, but will p

    		•