Suppose the labor supply Qs and labor demand Qd in Honduras is defined by the following equations.
Labor Demand (in 1000s): Qd = 16 - 4W
Labor Supply (in 1000s): Qs = 8 + 6W
Where W is the hourly wage rate in dollars per hour
Sketch (do not plot) the Labor Supply and Demand Functions
What is the equilibrium wage rate?
Why would unemployment and job rationing the consequences of setting a minimum wage of two dollar per hour in this market? Explain using the graph
Explain why a two-dollar minimum wage be a price floor instead of a price ceiling?