Diagram a model of supply and demand for a competitive labor market with a minimum wage in effect. Identify a group that gains and a group that loses when a minimum wage is imposed.
What will be an ideal response?
See Figure 30.8 for the model in The Economy Today or Figure 16.8 in The Micro Economy Today. Workers who are able to keep their jobs at the higher wage rates gain, while other workers lose their jobs because of the decreased quantity demanded of workers at the higher wage.
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What is the relationship between the slope of the aggregate expenditure curve and the expenditure multiplier?
What will be an ideal response?
When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent
This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________. A) 0.4; substitutes B) -0.4; complements C) -0.8; complements D) 0.8; substitutes