Unemployment and the Labor Market - Work It Out: Question 2 Consider an economy with the Cobb-Douglas production functio

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Unemployment And The Labor Market Work It Out Question 2 Consider An Economy With The Cobb Douglas Production Functio 1 (81.69 KiB) Viewed 30 times

Unemployment and the Labor Market - Work It Out: Question 2 Consider an economy with the Cobb-Douglas production function: Y = 5K0.2L0.8 K = 110000; L=9000 Round answers to two places after the decimal when necessary. c. Now suppose that Congress, concerned about the welfare of the working class, passes a law setting a minimum wage that is 10 percent above the current equilibrium wage. Assuming that Congress cannot dictate how many workers are hired at the mandated wage, calculate what happens to the real wage, employment, output, and the total amount earned by workers. Real wages = $ Total output= units d. Does Congress succeed in its goal of helping the working class? No, Congress does not succeed in its goal of helping the working class. O Yes, Congress does succeed in its goal of helping the working class. Employment = Total earned by workers = $ workers e. Does this analysis provide a good way of thinking about a minimum-wage law? Yes, this analysis does provide a good way of thinking about a minimum-wage law. O No, this analysis does not provide a good way of thinking about a minimum-wage law.