Question 3 A minimum wage that is set above a market’s equilibrium wage will result in an excess a. demand for labor, that is, unemployment. ob. supply of labor, that is, a shortage of workers. c. demand for labor, that is, a shortage of workers. d. supply of labor, that is, unemployment.
reason when minimum wages set above the market equilibrium wage
then at that wages demand for labor will be reduced and supply will
be increased as employee in not interest to hire them at the wages
as the wage fund will not allow them to do so surplus labor will be
available in the market and unemployment will prevail.
reason when price is imposed then market is bind to sell them at
that price so at $30 supply is 70 units and demand is 120 units so
120-50 will fall short of at price of $30.
7 ( D)
reason as per the graph show before tax equilibrium price is 6
but after tax it downward to left hand side now at this point of
equilibrium price will be $ 5 in the market .
reason if supply is relative inelastic and demand is elastic so
most of burden will be born by supplier or seller as they rise the
price burden will fall more on them than the buyer and buyer will
not be ready to purchase at that price due to price elasticity but
if seller want to sell they have to charge higher price including