--%>
Assignment Help - homework help

Question on level of free market wage rate and employment

In the year of 1996, the U.S. Congress raised the minimum wage from $4.25 per hour to $5.15 per hour. Some of the people suggested that a government subsidy could help employers finance the higher wage. Assume the supply of low-skilled labour is specified by

                                                                          LS= 10w

where LS is the quantity of low-skilled labour (in millions of persons employed each year) and w is the wage rate (in dollars per hour). The demand for labour is specified by
                                                             LD =80-10w

What will be the level of free market wage rate & employment? Assume the government sets a minimum wage of $5 per hour. How many people would be employed then?
In a free-market equilibrium, LS = LD. Solving out yields w = $4 and LS = LD = 40. If the minimum wage is $5, then LS = 50 and LD = 30. The number of people employed will be specified by the labour demand, thus employers will hire 30 million workers.

2011_ans 12.png

 

   Related Questions in Finance Basics

  • Q : Illustrate a market of fictitious

    Illustrate a market wherein the equilibrium dollar price of one unit of fictitious currency Zee is $5 (the exchange rate is $5 = Z1). Then illustrates on your diagram a decline in the demand for Zee. a. Referring to this diagram, d

    		•
  • Q : What is Other Finance Refund to

    Refund to Reverted Appropriations: It is a receipt account to record the return of monies (example, abatements and reimbursements) to appropriations which have reverted.

    		•
  • Q : Clarify retained earnings and its

    Clarify retained earnings?  Describe importance of this? Retained earnings represent the sum of all the earnings available to common stockholders of a business at the time of its entire history, minus the tota

    		•
  • Q : Slope of the budget line and the

    Consider someone won $15 on a Lotto Canada ticket at the local 7-Eleven & decided to spend all the winnings on bags of peanuts and candy bars. The cost of candy bars is estimated as $.75 and the cost of peanuts is $1.50. Plot the data in this table as a budget li

    		•
  • Q : How the production of public goods will

    Normal 0 false false

    		•
  • Q : Question based on consolidated balance

    Normal 0 false false

    		•
  • Q : Can a corporation contain too much

    Can a corporation contain too much working capital? Describe. A firm can contain too much working capital if this is losing the chance to invest in high returning fixed assets and if this goes beyond the amount of working capital required for r

    		•
  • Q : Financial strategy describe the sales

    describe the sales forecasting process ?

    		•
  • Q : Explain Budget Bill Budget Bill : The

    Budget Bill: The legislation symbolizing the Governor’s proposal for spending authorization for the subsequent fiscal year. The Budget Bill is all set by the Department of Finance and submitted to each house of the Legislature i

    		•
  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas. You can use the resources that i attached, also you can use another resources to cover the outlines.

    		•