Nouha Fakhoury

Economics Homework
Chapter 28 - Exercise 3.1

a, 1) The quantity of labor supplied will be 16(12)-30= 162

2)The number of unemployed will be 35. QS-QD=UE 162-127
3) The unemployment rate will be 3.62%
162-35/162

b. The wage rate will decrease because when the wage rate is determined by the
market the majority of the market are labor workers which are obligated to the
minimum wage. In addition, since there is high unemployment the prices increase,
output decrease, and wages increase. If the law passed, this will make the total
unemployment decrease in the market.

c. No, the labor market will adjust in the long run, but not quickly. The labor market
still need time to hire new workers and to adjust to the new market. Especially the
recruitment of workers take time.