Determinations of minimum wages in perfectly competitive

Assignment Help Macroeconomics
Reference no: EM1316910

When government decides that the equilibrium wage in a labor market is too low it often sets a "minimum wage" or "wage floor," manadating that the market wage can be no lowrr than the minimum wage. Many critics of the policy contend that it is inffective and counterproductive for two reasons: (1) it creates unemployement among the lo-wage, mostly poor workers it was supposedly designed to help, mand (2) it lowers the total earnings (WxL) recived by the low-wage workers who are still employed.

Assuming that the labor marget for low-wage workers is perfectly competitive and all low-wage industries are covered by minimum wage laws, briefly discuss and illustrate the circumstances under which the minimum wage would (1) not lead to unemployement, amd (2) not cause a reduction in the total earnings of low-wage workers who are still employed.

Note: The demand for labour in a perfectly competitive industry is ndetermined by the value of the marginal product of labor," or VMP where VM = pxMP, with p=the price of the product th elabor is used to produce, market research has revealed that in most cases the lemand for low-wage labor is relatively inelastic.

Reference no: EM1316910

Questions Cloud

Florida state university administers a mathematics : Florida State University administers a mathematics placement test to students where they 1st enter the university.
Testing company-s claim : From past data, it is recognized that company's production process results in normally distributed yield strengths. Test company's claim at a = 0.05.
Computing yield to maturity for u.s. treasuries securities : Computing yield to maturity for U.S. Treasuries securities and examine the chart WSJ or IBD provides
Regarding the national defence authorization act : Cyber security Act of 2012, National Defence Authorization Act (NDAA), and Library Services and Technology Act are the three recent laws dealing with computer crimes.
Determinations of minimum wages in perfectly competitive : Briefly discuss and illustrate the circumstances under which the minimum wage would (1) not lead to unemployement, amd (2) not cause a reduction in the total earnings of low-wage workers who are still employed.
Make the equation in its equivalent exponential form : Make the equation in its equivalent exponential form
Utilizing the finite population correction factor : 1st a confidence interval is constructed without utilizing the finite population correction factor.
Percent yield and percent error : Find the theoretical, percent yield and percent error of the reaction - Calculate the percent error of this reaction.
Random sample of eight cars : A random sample of eight cars from each manufacturer is selected, and eight drivers are selected to drive each automobile for a specified distance.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Elasticity of demand

How much does the gross price increase in each market

  Mergers and market strategies

Social Dynamo Corporation earned profits last year of $49 million on sales of $500 million. During the same period, its major competitor - EIO Corp.- enjoyed sales of $490 million and earned profits of $52 million.

  Supply and foreign exchange market operation

According to the quantity theory of money, what is the effect of increase in quantity of money?

  Calculating quantity and equilibrium price

Assume the government imposes a tax of $2.00 per unit to reduce widget consumption and raise government revenues. What will the equilibrium quantity be?

  Explanation of law of comparative advantage

The law of comparative advantage recommends that countries specialize in those products in which they have a comparative advantage, not an absolute advantage.

  Shift in the ad curve

The rising stock market implies an increase in wealth, at least as measured on paper. If we assume that some of this increased wealth gets consumed, then the rising stock market fuels an increase in aggregate demand, and may contribute to an inflatio..

  Four phases of business cycle

What is the business cycle and how is it linked to a secular trend?  Describe each of the four phases of the business cycle and indicate how they a linked to the concepts of a "boom", a "recession" and an "expansion".

  Production decisions of company

A company produces two main products: electronic control device3s and specialty microchips. The average total cost of producing a microchip is $300; the firm sells the chips to other high-tech manufacturers for $550. Should the company produce con..

  Analysis of price-quantity and diminishing returns

At the management luncheon, two managers were overheard arguing about the following statement: "A manager should never hire another worker if the new person causes diminishing returns". Is this statement correct? If so, why? If not, explain why no..

  Analysis of interest rate charged by banks

Select any low income country (or countries) on which you can find data on the following (a web search should yield you the required information)

  Impact of loan on real wages

Write down the effect on the real wage and hours worked in the short run.

  Sources of expenditures in economy

List and explain the sources of expenditures in economy by focusing on the 4 major sectors of economy.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd