--%>
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 : Choosing a statistical Model Choosing a

    Choosing a statistical Model: A number of problems arise in determining whether the work is truly rigorous or not. It is important to determine whether the model chosen makes theoretical and intuitive sense. <

    		•
  • Q : NO profit-maximizing firm in long run

    In the long run no profit-maximizing firm would produce yet a level of output at that: (w) marginal revenue is below the price charged consumers. (x) demand is relatively price inelastic. (y) total revenue would exceed total variable costs but not tot

    		•
  • Q : Transaction Costs-Process of trial and

    In an uncertain globe, people are supposed to try to make best use of their satisfaction by: (1) Determining in advance the mixture of goods that maximizes the utility and then purchasing this mix. (2) The procedure of trial and error. (3) Making marginal decisions ti

    		•
  • Q : Marginal and average revenue-market form

    In which market form is the marginal and average revenue of a firm always equivalent? Answer: Average and marginal revenue of a firm are for all time equivalents beneath perfect competition.

    		•
  • Q : Increasing-cost industries average

    Within increasing-cost industries average there are: (w) production costs fall as output increases. (x) production costs rise as the number of firms in the industry grows. (y) production costs rise when the number of firms into the industry falls. (z)

    		•
  • Q : Income Distribution by Marginal

    As per the marginal productivity theory of income distribution, within a system of market capitalism, in that case income is distributed primarily in accord along with: (1) resource productivity and ownership. (2) how

    		•
  • Q : Profit-maximizing output to maximizes

    HoloIMAGine has patented a holographic technology which creates 3-D photography obtainable to consumers. So HoloIMAGine’s: (w) lowest possible average total cost arises at precisely the output where profit is maximized. (x) market supply curve is the same to its

    		•
  • Q : Direction of the income effect The

    The direction of the income effect can’t be: (i) Negative for inferior goods. (ii) Positive for the luxury goods. (iii) Zero for a good which some people consider a requirement. (iv) Expected when we know only the size and direction of substitution effect.

    		•
  • Q : Marginal revenue curve A monopolist

    A monopolist which does not price discriminate has a marginal revenue curve which slopes down faster than does the demand curve the monopolist faces since: (1) economies of scale are significant. (2) selling more requires lowering the

    		•
  • Q : Price of Substitute goods What occurs

    What occurs to the demand for a good whenever the price of Substitute goods downs?Answer: Whenever the price of substitute good downs, then the demand for the specified good too downs.

    		•