a Suppose the minimum wage is above the equilibrium wage in the market for

A suppose the minimum wage is above the equilibrium

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a. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers. Ans: Market wage: 20 Number of workers who are employed: 10 Number of workers who are unemployed: 12 Total wage payments: $200
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b. Now suppose the secretary of labor proposes an increase in the minimum wage. What effect would this increase have on employment? Does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticities, and neither? Ans: Increase in minimum wage will further reduce the employment. It depends on both elasticity. c. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities, and neither? Ans: More people will be unemployed. It depends on both elasticity. d. If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic? Ans: It will raise total wage payments to unskilled workers. The answer will be reversed if the demand for unskilled labor were elastic. Q9. The U.S. government administers two programs that affect the market for cigarettes. Media campaigns and labeling requirements are aimed at making the public aware of the dangers of cigarette smoking. At the same time, the Department of Agriculture maintains a price-support program for tobacco farmers, which raises the price of tobacco above the equilibrium prices. a. How do these two programs affect cigarette consumption? Use a graph of the cigarette market in your answer. Media campaigns and labeling requirements will reduce the demand of cigarette while price-support program will reduce the supply of tobacco. b. What is the combined effect of these two programs on the price of cigarettes?
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Raise the price of cigarettes. c. Cigarettes are also heavily taxed. What effect does this tax have on cigarette consumption?
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