--%>
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 : Stable Competitive Economy Into a

    Into a stable competitive economy without innovation, transaction, or uncertainty costs, all accounting profits would be: (w) pure economic profits. (x) payments required to secure owner-provided resources. (y) pure e

    		•
  • Q : Calculate of total variable in an area

    Total variable costs can be estimate as: (1) 0bcq1. (2) 0adq2. (3) 0Peq2. (4) aPed. (5) Cannot be measured within demonstrated figure.

    Q : Statistical perspective of Inferior

    On an average, American families with more income tend to contain fewer children than families with less income. This fact recommends that, at least from a purely statistical perspective, the American children are: (1) Inferior goods. (2) Substitute goods for the cats

    		•
  • Q : Problem on equal marginal utilities per

    Substitution takes place when prices change and hence demand curves are negatively-sloped since of the behavior of consumers which most directly underpins the law of: (1) Equivalent marginal utilities per dollar. (2) Diminishing net utility. (3) The income effect. (4)

    		•
  • Q : Problem on Closed Shops Can someone

    Can someone please help me in finding out the accurate answer from the following question. The firm which operates beneath a closed shop agreement: (i) Produces more gains than the firm beset through union strikes. (ii) Is less beneath organized labor's control than t

    		•
  • Q : Wage Rate and Exploitation problem

    Assume that a firm possessesing both monopsony power as the employer and market power in its output market, however that can neither wage neither discriminate nor price discriminate. In equilibrium, in its labor market for workers, of the given variables the lowest va

    		•
  • Q : Requirements for pure competition The

    The needs for pure competition are most intimately met by the market for: (i) domestic (American) steel. (ii) comic books. (iii) sugar-coated cereal within your local grocery store. (iv) stocks and bonds traded on Wall Street after they have been issu

    		•
  • Q : Relationship between MPS and multiplier

    Relationship between MPS and multiplier:K=1/1-MPC = 1/MPS or inverse relationship between MPS and the size of multiplier.

    		•
  • Q : Moral Hazard-Unemployment compensation

    Jared does not care regarding his job as he is eligible for the unemployment compensation; therefore he frequently goofs off at work and exhibits up late. This is the trouble of: (i) Adverse selection. (ii) Efficiency salaries. (iii) Moral hazard. (iv) Symmetric infor

    		•
  • Q : Distribution of income-inequitable

    Reliance on private demands and supplies to allocate resources and goods is least specific to yield an economically inefficient solution when: (i) producers have significant monopoly power. (ii) a good is nonrival and

    		•