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5. Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply curves that follow. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. WAGE (Dollars per hour) 24 21 9 15 12 0 50 Supply Demand 150 300 450 000 750 900 1050 1200 LABOR (Thousands of workers) Graph Input Tool Market for Labor Wage (Dollars per hour) Labor Demanded (Thousands of workers) 3.00 1,050 Labor Supplied (Thousands of workers) 150

Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Labor Demanded Labor Supplied Wage (Thousands of workers) (Thousands of workers) Shortage or Surplus? $9.00 Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $9.00. Which of the following statements are true? Check all that apply. Binding minimum wages cause frictional unemployment. In this labor market, a minimum wage of $9.00 is binding.. If the minimum wage is set at $12.50, the market will not reach equilibrium. In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium.