Answer Happy

Labour markets are beginning to stabilize after two years of covid-related turbulence The unemployment rate in Manitoba recently dipped below 5 per cent, its pre- pandemic level. In this question, we will consider the labour market for bartenders in Winnipeg. (a) Draw a typical supply & demand graph for Winnipeg bartenders. Assume that at any wage the substitution effect dominates the income effect. Mark the equilibrium wage and the equilibrium employment. What is the unemployment rate at the equilibrium wage rate? (6 points) (b) Suppose we are told that there is unemployment in this market and that bartenders are paid a minimum wage. Add a minimum wage that is consistent with this claim./Show the unemployment on your graph. (6 points) (c) As Manitoba emerges from the pandemic, consumers have increased their average spending on evenings out at restaurants and bars. How will this affect the market for bartenders? Explain any shifts in the supply & demand for labour. Show graphically the new employment & unemployment at the minimum wage. Assume there is still unemployment. (6 points) (d) Now assume that the change in part (c) reduced unemployment to zero despite the ongoing presence a minimum wage. Show this case graphically. (6 points)
(d) Now assume that the change in part (c) reduced unemployment to zero despite the ongoing presence a minimum wage. Show this case graphically. (6 points) (e) The Stefanson administration is considering a modest increase in the minimum wage. Why is this likely to cause unemployment among bartenders but not among economics professors? Explain briefly using the terminology we adopted in class. Assume both markets have similar shaped supply curves. (2 points)