Consider the market for labor depicted by the demand and supply curves that follow.
(Dollars per hour)LABOR (Thousands of workers)Demand Supply
Graph Input Tool
Market for Labor
Wage
(Dollars per hour)
3.00
Labor Demanded
(Thousands of workers)
1,050
Labor Supplied
(Thousands of workers)
150
Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will result in a shortage or a surplus.
Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers.
Wage Labor Demanded Labor Supplied Shortage or Surplus or neither?
(Thousands of workers) (Thousands of workers)
$9.00
Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $9.00.
Which of the following statements are true? Check all that apply.
1. Binding minimum wages cause frictional unemployment.
2. If the minimum wage is set at $12.50, the market will not reach equilibrium.
3. In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium.
4. In this labor market, a minimum wage of $9.00 is binding.