A binding minimum wage:

a. Alters both the quantity demanded and quantity supplied of labour.

b. Affects only the quantity of labour demanded; it does not affect the quality of labour supplied.

c. has no effect on the quantity of labour demanded or the quantity of labour supplied.

d. causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.

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Mahe AlamLv10

19 Jan 2021

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Consider the market for labor depicted by the demand and supply curves that follow.

Complete the following table with the quantity of labour supplied and demanded if the wage is set at $15.00. Then indicate whether this wage will result in a shortage or a surplus.

Wage Labor Demanded Labor Supplied Shortage or surplus

(Dollars per hour) (Thousands of workers) (Thousands of workers)

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.

Which of the following statements are true? Check all that apply.

1. In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium.

2. In this labour market, a minimum wage of $11.50 would be binding.

3. If the minimum wage is set at $15, the market will not reach equilibrium.

4. Binding minimum wages cause structural unemployment.

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2) Suppose the minimum wage is $4 per hour, and 1,100 units of labour are hired. Then the government raises the minimum wage to $6 per hour, and 900 units are now hired. Choose the correct statement. A) Total wages paid to workers has fallen. B) There is unemployment in this labour market. C) The quantity of labour supplied is greater at the higher minimum wage. D) The price elasticity of demand for labour is 0.5. E) all of the above except A.

Suppose the minimum wage is $4 per hour, and 1,100 units of labour are hired. Then the government raises the minimum wage to $6 per hour, and 900 units are now hired. Choose the correct statement.

A) Total wages paid to workers has fallen.

B) There is unemployment in this labour market.

C) The quantity of labour supplied is greater at the higher minimum wage.

D) The price elasticity of demand for labour is 0.5.

E) all of the above except A.