Suppose that the “greasy food” sector of the economy did not offer health insurance before the passage of the ACA, and “greasy food” workers were not interested in health insurance.

(a) Draw and label an initial labor market equilibrium where the wage equaled

$9/hour.

(b) Assume that after passage of the ACA, the “greasy food” owners chose to pay a

$0.50 per hour fi ne rather than offer health insurance. What would happen to the market wage in the sector? What would happen to employment in the sector? Explain your answer.