Question: I am needing help with section 3, 4 and 5 (I attempted part 3 and would like to know if I did it correctly) I
I am needing help with section 3, 4 and 5 (I attempted part 3 and would like to know if I did it correctly) I am not sure where to even start with how to start the other problems. I don't need the answers, just how can I go about answering them?
Part 3
Given the surplus of workers in b., we have to find a way to allocate hours of work.The city decrees that employers must hire the workers with the lowest opportunity cost for hours worked first (those offering to work on the lower left part of the supply curve).
a.Employers who are still hiring workers.(2 points)
Employers who are still hiring workers lose area B and gain area A from the trade change, because they are now paying a higher minimum wage for the workers they are still willing to hire
b.Employers who are no longer hiring.(2 points)
Employers whoa re no longer hiring workers lose area C and do not gain anything from the trade, because they are no longer willing to hire workers at the minimum wage of $11. In other words, area C is a deadweight loss.
c.Workers who are still employed.(2 points)
Workers who are still employed would remain the same in area D
d.Workers who are no longer employed.(2 points)
These workers would be area F
In which situation(s) is there a deadweight loss and how large is it?(1 point
Part 4
It turns out that the city of Tucson cannot enforce the minimum wage very well and they cannot tell employers whom to hire. An underground market for jobs develops. The city has limited resources for enforcement, so that they can only catch employers in the underground market one hour out of every 100 hours that the employer cheats on the minimum wage.The fine for 1 hour of cheating is $100. Therefore, the expected fine the employer will pay is $1 per hour. The expected fine reduces what the employer is willing to pay to the worker in the underground market by $1 at every level of quantity demanded. If the employers all move underground,
a.What is the wage that workers will receive for their work? ____________.(1 point)
b.How many hours of work will be transacted?_________________.(1 point)
c.What is the per-hour cost paid by the employer for an hour of work after the expected fine is included? (1 point)
d.Is the deadweight loss under the "cheating equilibrium" larger or smaller than under the situation described in Part 3?(1 point)
Part 5
e.In most situations, employers are not so blatant about cheating on the law.Instead of breaking the law directly, they change working conditions and may change their hiring patterns.Give examples of the kinds of changes you might expect employers to make. (1 point)
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