Wage W4 Supply curve w2 Minimum Wage W1 w3 Demand curve Quantity of Labor The supply and demand diagram above shows a labor market with a binding minimum wage. Use the diagram to answer the following questions about the winners and losers of this policy. You will need to use the labels provided (e.g. Q0, Q1, Q2, W1, W2, W3, W4) to construct the formulas for each answer. For example, if I asked "What is the total amount of wages paid to workers in this market before the minimum wage law is enacted", the correct answer would be: (W1x Q1) dollars. (a) What is the gain in total additional wages for those employees who still are employed after the minimum wage law is enacted? (b) What is the total loss in wages for those employees who lose their jobs as a result of the minimum wage law? (c) Economists define "unemployment" as the number of workers willing to work at a specific wage who cannot find employment. Using that definition, what is the total number of unemployed workers as a result of the minimum wage law above? (d) What is the total wage costs for employers after enactment of the minimum wage law above? (e) What is the loss in consumer surplus for employers after enactment of the minimum wage law above?

Wage W4 Supply curve w2 Minimum Wage W1 w3 Demand curve Quantity of Labor The supply and demand diagram above shows a labor market with a binding minimum wage. Use the diagram to answer the following questions about the winners and losers of this policy. You will need to use the labels provided (e.g. Q0, Q1, Q2, W1, W2, W3, W4) to construct the formulas for each answer. For example, if I asked "What is the total amount of wages paid to workers in this market before the minimum wage law is enacted", the correct answer would be: (W1x Q1) dollars. (a) What is the gain in total additional wages for those employees who still are employed after the minimum wage law is enacted? (b) What is the total loss in wages for those employees who lose their jobs as a result of the minimum wage law? (c) Economists define "unemployment" as the number of workers willing to work at a specific wage who cannot find employment. Using that definition, what is the total number of unemployed workers as a result of the minimum wage law above? (d) What is the total wage costs for employers after enactment of the minimum wage law above? (e) What is the loss in consumer surplus for employers after enactment of the minimum wage law above?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: Earnings And Discrimination

Section: Chapter Questions

Problem 3PA

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