Please use full sentences to support the answer in a logical

Please use full sentences to support the answer in a logical manner.

By Upload Assignment: Graded Hi Microsoft Word-aleuzenev ewercis × C Search Textbook Solutions | Ch XG3) Though they are older, many x+ ? https://blackboard viccnet.edu/bbcs webdav/pid-4030696-dt-content-rid-26993379_1/institution/CITL/Humanities Social an ? 4 of 6 -+Automatic Zoom 4) The graph below illustrates the labor market for processing chickens at an lowa plant. It includes a minimum wage of $12 per hour that was recently established by the lowa legislature Will this minimum wage produce a shortage or surplus, and how large will that shortage or surplus be? Think carefully and explain your reasoning $/hr 28 24 20 16 12 Thousands of employees 2 4 68 10 ICP Labor Market 558 3

Solution

Equilibrium wage is $17
Minimum wage is $12
Since the minimum wage is less than equilibrium wage there would be less supply of labor at minimum wage of $12 leading to shortages
Shortage = Qd-Qs at minimum wage of $12
= 8000-3000 = 5000
So there would be shortage of 5000 employees