Question: the market for lowskilled workers is highly competitive due to...
The market for low-skilled workers is highly competitive, due to the high numbers of low skilled individuals. If the labor supply is given by the equation QS = 10W and measured per hour, and the demand for labor is given by the equation QD = 240 − 20W. Where Q measures the quantity of labor hired (in thousands of hours). Answer the following:
(a) At the market equilibrium what is the going wage rate and quantity of low-skilled labor being employed?
(b) If the union successfully forces a minimum wage increase of $9 per hour, at the new market equilibrium what will be the new quantity of labor hired and the quantity of any excess (demand or supply) of labor?
(c) At the $9 minimum wage how much deadweight loss is created?
(d) After the implementation of the $9 minimum wage, in terms of surplus how much better off are low-skilled workers and how much worse off are employers?
(e) If the minimum wage is set at $11 rather than $9 how does the deadweight loss and surplus change?