Using Figure 22.9 as your starting point, with a minimum wage of W2 in place, analyze how each of the following events will affect the demand and supply curves for unskilled labor, the number of laborers hired by firms, and the amount of surplus labor that exists.

a. The economy booms and the demand for goods and services significantly increases.

b. The federal government raises the minimum wage above W2.

c. Immigration into the United States significantly increases.

d. The government reduces the amount of social security taxes paid by employers who hire workers and reduces the amount of social security taxes withheld from workers’ paychecks.

e. The government significantly cuts education spending resulting in a large decrease in the productivity of unskilled workers.

Labor units Total Product L of Labor Q Price of Output P Total Revenue TR= P*Q Marginal Revenue Product Wage of Labor MRP = ATR W 0 0 $5.00 $1,100 1 100 $5.00 $1,100 2 300 $5.00 $1,100 3 600 $5.00 $1,100 4 950 $5.00 $1,100 5 1350 $5.00 $1,100 6 1740 $5.00 $1,100 7 2100 $5.00 $1,100 8 2400 $5.00 $1,100 9 2620 $5.00 $1,100 10 2740 $5.00 $1,100