Consider the following supply and demand equations for labor in a given industry: (20 points) The supply of labor is W = .25L The demand for labor is W = 12 - .25L
B. If the labor market given above is for a community in which monopolistic labor market conditions apply, what will be the wage rate paid by the monopolistic profit-maximizing firm before the minimum wage is applied? (Assume part-time employment is possible.) How many workers will be employed?
C. If a $5 minimum wage is now applied to the monopolistic market described above, how many laborers will the firm employ? Sketch your answer below. As a policy maker, would you support a minimum wage law? Why?