8. Ch. 20 Problems and Applications Q10 Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation. On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labor. Wage (Dollars per hour) 20 18 16 14 12 2 0 0 Demand 1 2 1 1 || True 3 4 5 7 Quantity of Labor (Thousands) False 6 8 Supply Suppose employees place a value on this benefit exactly equal to its cost. Suppose the wage is free to balance supply and demand. 9 10 On the preceding graph, use the purple line (diamond symbol) to show the effect this employer mandate has on the supply of labor. New Demand New Supply Use the black point (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to indicate the equilibrium wage and level of employment after this law is implemented. Equilibrium Before Law True or False: Employers are made worse off but employees are made better off by this law. In this case, the wage rate with the employer mandate will be $ in the level of unemployment. Equilibrium After Law Now suppose that workers do not value the mandated benefit at all. Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. per hour, which will lead to Which of the following statements are true under this circumstance? Check all that apply. Employees are neither better nor worse off than before the mandated benefit. Employers are worse off than before the mandated benefit. The equilibrium quantity of labor will rise. The supply curve of labor doesn't shift at all. The wage rate will decline by exactly $4. in the level of employment and Grade It Now Save & Continue Continue without sa
8. Ch. 20 Problems and Applications Q10 Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $4 per hour. Assume that firms were not providing such benefits prior to the legislation. On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labor. Wage (Dollars per hour) 20 18 16 14 12 2 0 0 Demand 1 2 1 1 || True 3 4 5 7 Quantity of Labor (Thousands) False 6 8 Supply Suppose employees place a value on this benefit exactly equal to its cost. Suppose the wage is free to balance supply and demand. 9 10 On the preceding graph, use the purple line (diamond symbol) to show the effect this employer mandate has on the supply of labor. New Demand New Supply Use the black point (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to indicate the equilibrium wage and level of employment after this law is implemented. Equilibrium Before Law True or False: Employers are made worse off but employees are made better off by this law. In this case, the wage rate with the employer mandate will be $ in the level of unemployment. Equilibrium After Law Now suppose that workers do not value the mandated benefit at all. Suppose that, before the mandate, the wage in this market was $3 above the minimum wage. per hour, which will lead to Which of the following statements are true under this circumstance? Check all that apply. Employees are neither better nor worse off than before the mandated benefit. Employers are worse off than before the mandated benefit. The equilibrium quantity of labor will rise. The supply curve of labor doesn't shift at all. The wage rate will decline by exactly $4. in the level of employment and Grade It Now Save & Continue Continue without sa
Chapter1: Making Economics Decisions
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Transcribed Image Text:8. Ch. 20 Problems and Applications Q10
Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee
by $4 per hour. Assume that firms were not providing such benefits prior to the legislation.
On the following graph, use the green line (triangle symbol) to show the effect this employer mandate has on the demand for labor.
Wage (Dollars per hour)
20
18
16
14
2
0
Demand
2
I
I
3
4
5
6
Quantity of Labor (Thousands)
7
True
8
O False
Supply
Suppose employees place a value on this benefit exactly equal to its cost.
Suppose the wage is free to balance supply and demand.
9 10
On the preceding graph, use the purple line (diamond symbol) to show the effect this employer mandate has on the supply of labor.
New Demand
New Supply
Use the black point (plus symbol) to indicate the equilibrium wage and level of employment before this law, and use the grey point (star symbol) to
indicate the equilibrium wage and level of employment after this law is implemented.
Equilibrium Before Law
True or False: Employers are made worse off but employees are made better off by this law.
In this case, the wage rate with the employer mandate will be $
in the level of unemployment.
Equilibrium After Law
Now suppose that workers do not value the mandated benefit at all.
Suppose that, before the mandate, the wage in this market was $3 above the minimum wage.
per hour, which will lead to
Which of the following statements are true under this circumstance? Check all that apply.
Employees are neither better nor worse off than before the mandated benefit.
Employers are worse off than before the mandated benefit.
The equilibrium quantity of labor will rise.
The supply curve of labor doesn't shift at all.
The wage rate will decline by exactly $4.
in the level of employment and
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