Assume that the supply of law-skilled worker is fairly elastic, but the employers’ demand for such workers is fairly inelastic. If the policy goal is to expand employment for low-skilled workers, is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor? What if the policy goal is to raise wages for this group? Explain your answer with supply and demand diagrams.
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- Suppose the demand for burger flippers is LD = 400 – 20W where L=number of burger flippers and W=nominal wage rate ($/hr.) The equilibrium wage is $5 but the government mandates a $6 minimum wage. Draw a graph to show what happens to the labor demand for burger flippers after this minimum wage law is enacted. Suppose there is an uncovered sector (no minimum wage law) where LS = -100 + 80W and LD = 300 – 20W before the minimum wage law is put into effect. Suppose all the workers that can’t find jobs as a result of the minimum wage law enter the uncovered sector. Compute how the labor supply function changes. Calculate the equilibrium wage and employment in the uncovered sector? Draw another graph illustrating these effects. Don't copy solutions from other sites!!!!!arrow_forwardQuestion 26 of 30 Consider the labor market for electricians. The demand curve is downward sloping and the supply curve is upward sloping. In this market, however, there is a strong labor union. Assume that the electrician's union is able to negotiate a new contract that substantially raises their member's wages. Select the correct statement. Fewer people want to work as electricians as the union increases wage. Firms hire the same number of electricians at both wages. The wage increase is unambiguously beneficial for all the electricians working before the wage increase. O A consequer of the union negotiating a higher wage is fewer jobs for electricians. 8:25 PM 46°F 12/15/2021 aarrow_forwardIf the price elasticity of demand for labor is 0.2 and the wage increased from $11 to $16 an hour, what is the predicted decrease in the level of employment in percentage terms?arrow_forward
- Assume that the market for unskilled workers is perfectly competitive and that the demand for unskilled workers is relatively elastic. The government imposes a minimum wage in this market. Using a correctly labeled graph, show the following. a. The market wage rate paid to hired unskilled workers. b. The number of unskilled workers hired. c. The number of unskilled workers still looking for employment. Assume that unskilled workers are the primary source of labor in the agricultural industry, strawberries. Use a correctly labeled graph of the strawberry market to explain how the minimum wage law will affect the market for strawberries and identify the following. d. The price of strawberries. e. The quantity of strawberries.arrow_forwardLabor demand for low-skilled workers in the United States is w = 24 - 0.1 E where E is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S. low-skilled workers who supply labor inelastically. If the United States opened its borders to immigration, 20 million low-skill immigrants would enter the United States and supply labor inelastically. What is the market-clearing wage if immigration is not allowed? What is the market-clearing wage with open borders? How much is the immigration surplus when the United States opens its borders? How much surplus is transferred from domestic workers to domestic firms?arrow_forwardDemand and supply conditions in the market for unskilled labor are important concerns to business and government decision makers. Consider the case of a federally mandated minimum wage set above the equilibrium, or market clearing, wage level. Some of the following factors have the potential to influence the demand or quantity demanded of unskilled labor. Influences on the supply or quantity supplied may also result. Holding all else equal, describe these influences as increasing or decreasing, and indicate the direction of the resulting movement along or shift in the relevant curve(s). A) An increase in the quality of secondary education. B) A rise in welfare benefits. C) An increase in the popularity of self-service gas stations, car washes, and so on.arrow_forward
- Which effect is most associated with a shortage of laborarrow_forwardto finance a new health insurance program, the government of Millonia imposes a new $2-per-hour payroll tax to be paid by employers. What do you expect to happen to wages and the size of the workforce? Explain How will this answer change in markets where labor is inelastically demanded? Explainarrow_forwardThe legislature in a state in the South passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the northern and southern states are very similar.The initial position of a supply-and-demand graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new, higher wage for workers in the northern state.Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the southern state. Which of the following groups are better off as a result of the union action in the northern state? (select all that apply) a) The original workers in the southern state b) Workers in the northern state employed at the union wage c) Employers in the northern state d) Workers who find new jobs in the southern statearrow_forward
- V4. Suppose that you have the following information about the market for employees in your buisness: Supply: W=20+N Demand: W=40-N a. Suppose that the union negotiates a team size of only 5 employees. Draw this graphically and calculate the new equilibrium wage number of employees. b. Draw this graphically and calculate the equilibrium wage and number of employees hired.arrow_forwardAn effective minimum wage policy in a competitive market will increase unemployment and increase the total earnings of labor only if the demand for labor is (A) relatively inelastic (B) relatively elastic (C) unit elastic (D) greater than the supply (E) positively related to the wage ratearrow_forward11. Problems and Applications Q13 Suppose that Parliament passes a law requiring employers to provide employees some benefit (such as dental care) that raises the cost of an employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation. On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labour. Wage (Dollars per hour) 20 18 16 14 12 10 8 4 2 0 Demand + 0 1 + 2 3 4 5 6 7 Quantity of Labour 8 Supply 9 10 New Demand New Supply Equilibrium Before Law Suppose employees place a value on this benefit exactly equal to its cost. Equilibrium After Law (?)arrow_forward
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning