Suppose that the market labor supply and labor demand equations are given by Qs = 5W and Qd = 30 - 5W. If a minimum wage is set at $4.00 (W = 4), then:
A) 15 workers will be supplied and demanded.
B) 20 workers will be supplied and demanded.
C) 20 workers will be supplied, but only 10 workers will be demanded.
D) 10 workers will be supplied, but 20 workers will be demanded.

Question

Quizplus · Accepted Answer

At a minimum wage of $4.00, the quantity supplied (Qs) is 5(4) = 20 workers, and the quantity demanded (Qd) is 30 - 5(4) = 10 workers. Thus, 20 workers will be supplied, but only 10 will be demanded, leading to a surplus of labor.

Suppose That the Market Labor Supply and Labor Demand Equations