Is there any involuntary unemployment at any wage

Reference no: EM13177817

European governments tend to make greater use of price controls than does the U.S. government. For example, the French government sets minimum starting yearly wages for new hires who have completed le bac, certification roughly equivalent to a high school diploma. The demand schedule for new hires with le bac and the supply schedule for similarly credentialed new job seekers are given in the accompanying table. The price here- given in euros, the currency used in France- is the same as the yearly wage.

wage (per year)    Quantity demanded (new job offers per year)     Quantity supplied (new job seekers per year)
€45,000 200,000                                                 325,000
€40,000 220,000                                                 320,000
€35,000 250,000                                                 310,000
€30,000                             290,000                                                 290,000
€25,000 370,000                                                 200,000

a. In the absence of government interference, what are the equilibrium wage and number of graduates hired per year? Illustrate with a diagram. Will there be anyone seeking a job at the equilibrium wage who is unable to find one-that is, will there be anyone who is involuntarily unemployed?

b. Suppose the French government sets a minimum yearly wage of €35,000. Is there any involuntary unemployment at this wage? If so, how much? Illustrate with a diagram. What if the minimum wage is set at €40,000? Also illustrate with a diagram.

c. Given your answer to part b and the information in the table, what do you think is the relationship between the level of involuntary unemployment and the level of the minimum wage? Who benefits from such a policy? Who loses? What is the missed opportunity here?

Reference no: EM13177817

Questions Cloud

Describe monetary theories of the business cycle : Monetary theorists maintain that to eliminate the business cycle, it is necessary to eliminate,Through 2005, the most serious U.S. trough since the Great Depression was the one that occurred in,According to monetary theories of the business cycle, fl..

Explain the rational expectations theory : Which of the following is the most valid expression of a theory of underconsumption as a cause of business cycles? a. capital goods production encroaches on consumer goods production b. income equals production, but not all income is used for current..

Describe the employment act of 1946 : The Employment Act of 1946, passed by the U.S. Congress after World War II, a. made the Federal Reserve responsible for achieving and maintaining full employment b. identified specific behavior and targets for the conduct of U.S. foreign aid

Explain the u.s. unemployment rate among black teenagers : The organization that develops and recommends to the U.S. President national economic policies to foster maximum employment, production, and purchasing power is the a. Joint Economic Committee

Is there any involuntary unemployment at any wage : certification roughly equivalent to a high school diploma. The demand schedule for new hires with le bac and the supply schedule for similarly credentialed new job seekers are given in the accompanying table. The price here- given in euros, the cu..

Find the equilibrium price and quantity for number of taxi : In order to ingratiate himself with voters, the mayor of Gotham City decides to lower the price of taxi rides. Assume, for simplicity, that all taxi rides are the same distance and therefore cost the same. The accompanying table shows the demand a..

Draw a supply curve for picasso blue period works : Given the supply curve from part a. the price of a Picasso Blue Period work will be entirely dependent on what factor(s)? Draw a diagram showing how the equilibrium price of such a work is determined.Why is this supply curve different from ones you..

Explain supply and demand diagrams : What accounts for whether case a or case b occurs? d. Suppose that a scalper had secretly learned before the announcement that Aaron Han would not play in the next game. What actions do you think he would take?

How automakers have increased their output ever faster : At the same time, Chinese consumers' incomes have risen. Assume that cars are a norma good. Use a diagram of the supply and demand curves for cars in china to explain what has happened in the Chinese car market.

User Account

All Pages