Suppose the demand and supply of labor in your town is given in the accompanying graph.

a. What is the equilibrium wage per hour and quantity of workers hired per month? 

b. What is the value of consumer surplus, producer surplus, and economic surplus in equilibrium?

c. Suppose the government institutes a minimum wage of $7.00 per hour in this market. What will be the new quantity of labor demanded, quantity of labor supplied, and quantity of labor hired in this market? 

d. What is the value of consumer surplus, producer surplus, economic surplus, and deadweight loss when the minimum wage is imposed on this market? 

e. Which parties in the market win and which lose from the imposition of the new wage?

Transcribed Image Text:

Wage per hour 11 109876543210 10 0+ 0 100 200 300 400 Quantity (thousands of workers per month) 500