Assignment:
Take out the demand and supply graph you drew in the last chapter. Label the supply curve S1, the demand curve D1 and the equilibrium point of supply and demand E1. Now find a different colored pencil and shift the demand curve out to the right, (label this new curve D2) but leave the supply curve unchanged. What affect does this shift have on the equilibrium price? The quantity? Label this new equilibrium E2. Take a photo and submit.
On a different sheet of graph paper, draw one demand curve (label it D1) and one supply curve (label it S1). Label the equilibrium as E1. Now with a different colored pencil, show an increase in supply by drawing in a second supply curve that shifts outward to the right (label it S3), and label the new equilibrium E3. If you have drawn the curves correctly, the new equilibrium will be at a price lower than the one that existed at E1; however the quantity demanded will be greater than at E1. The increase in quantity demanded is the result of the lower prices (recall the law of demand: in general consumers are willing to buy more when prices are lower versus when they are higher).
Take a photo and submit
Refer to the textbook and note that in the labor market, the supply is provided by households/individuals and the Demand is on the part of the firms. This is just the opposite of supply and demand when we consider the goods markets we have discussed thus far.
Draw a supply and demand curve for the labor market. Label the demand curve D4 and the supply curve S4. Label the horizontal axis write "Quantity of Labor" and the vertical axis "Wages".
Put in the coordinates at the equilibrium (E4: (100, $5.00) that is Quantity = 100 and Wages=$5.00.
Research the current minimum wage in Illinois. At the current minimum wage in Illinois will we have excess supply of labor (more workers willing to work than demanded) or excess demand by firms for those workers (more firms willing to hire workers than there are workers available)?
Take a photo of your graph and answer and submit