--%>
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 : Effects of price rise on Substitution

    Can someone help me in finding out the right answer from the given options. The Substitution away from the good is bigger when its price increases the: (1) More close substitutes there are for good. (2) More different utilizations to which the good has been place at t

    		•
  • Q : What is the equilibrium price For each

    For each case listed below, first state whether the change results in an increase or a decrease in demand, or in an increase or a decrease in supply.  Second, determine the direction of change in both the equilibrium price and the equilibrium quantity. a.     

    		•
  • Q : Maximizes profits or minimizes losses

    When it is feasible for total revenue to exceed variable costs, in that case a monopolist which does not price discriminate maximizes profits or minimizes losses from producing the output where marginal revenu

    		•
  • Q : Find average income by relatively

    When market demands for agricultural products are relatively price inelastic and relatively income inelastic both, in that case as per capita income raises, the average income of farmers will: (w) increase while supplies of agricultur

    		•
  • Q : Ac illustrate a firm under monopolistic

    illustrate a firm under monopolistic competition?

    		•
  • Q : What is marginal revenue Marginal

    Marginal revenue: This refers to the addition prepared to the total revenue.

    		•
  • Q : Equilibrium price in setting minimum

    Setting a minimum price floor above the equilibrium price will: (w) raise the equilibrium price. (x) create excess demand at the minimum price. (y) create excess supply at the minimum price. (z) clear the market at the minimum price.<

    		•
  • Q : Estimating N.I. by product by value

    Describe the steps taken in estimating N.I. by product/ value added technique? Answer: A) Classify all production units: Locate

    		•
  • Q : Price crosses elasticity of demand when

    When a 2% raise in the price of Kibbles causes a 1% raise in the quantity sold of Bits, in that case their price cross elasticity of demand is approximately _____ and such goods are _____. (w) -2; complements (x) 0.5; substitutes (y) 2; substitutes (z

    		•
  • Q : Determining opportunity cost Suppose a

    Suppose a doctor has a private clinic in New Delhi and his annual earnings are of Rs10 lakh. When he works in a Government Hospital in New Delhi, his annual earnings are of Rs 8 lakh. Determine the opportunity cost of encompassing a clinic in New Delhi?