4 Minimum wage legislation The following graph shows the lab

4. Minimum wage legislation The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Labor in the Fast Food Industry 20 18 Wage 8 rs per hour) 10 Labor Demanded Thousands of Labor Supplied (Thousands of workers) 360 240 14 12 10 o 80 120 180 240 300 360 420 480 540 600 LABOR (Thousands of workers) In this market, the equilibrium hourly wage is S and the equilibrium quantity of labor is thousand workers. Suppose a senator introduces a bill to legislate a minimum hourly wage of $8. This type of price control is called a

Solution

When wage = 8 , Labor demanded = 360 and Labor supplied = 240

b) In this market, the equilibrium hourly wage is $ 10 , and the equilibrium quantity of labor is 300 thousand workers.

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Suppose a senator introduces a bill to legislate a minimum hourly wage of $ 8, This type of price control is called a price floor.