Suppose the market labor demand curve is given by LD = 20−(1/2)W and the market labor supply curve is given by LS = 2W.

Graph the labor demand curve and the labor supply curve on the same graph (with L on the horizontal axis and W on the vertical axis, as we have done in class).

Determine the equilibrium employment (L∗) and wage (W∗) in this market.

Now suppose the government implements a minimum wage (W M ) of $10 in this market.

What will the new level of employment be?

In general, under what circumstances will a minimum wage less harmful to employment?

Answer rating: 100% (QA)

Labor demand curve equation is as follows LD 20 12W Labor supply curve equation is as ... View the full answer