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Questions: Assume that the (daily) demand (measured in hours of work) of unskilled labor in a particular town is given by D(w) = 150 - 10w, where w denotes the hourly wage rate. The supply of unskilled labor at the same location is given by S(w) = 5w.
(a) Plot the demand and supply curves on the same graph, having wages on the vertical axis and hours of work (that is, labor) on the horizontal axis.
(b) What is the free-market equilibrium wage for unskilled labor in this town?
(c) Explain what would be the effffect (if any) of a $12 per hour minimum wage man date in this market. How much labor would be demanded at that wage? What would be the supply of labor? Identify who benefifits and who loses from such measure and by how much. What can you say about the society as a whole: is it better or worse offff (and by how much)? Draw a new graph and mark everything clearly on it.
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