The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market.

-Refer to the figure above.If the government institutes a minimum wage rate of $30,the unemployment in the market will be ________.

Question

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market.
 
-Refer to the figure above.If the government institutes a minimum wage rate of $30,the unemployment in the market will be ________.

Quizplus · Accepted Answer

The minimum wage rate of $30 is above the equilibrium wage rate of $25. At this higher wage rate, the quantity of labor supplied exceeds the quantity of labor demanded, resulting in unemployment. The number of unemployed workers is equal to the difference between the quantity of labor supplied and the quantity of labor demanded at the minimum wage rate. In this case, the quantity of labor supplied is 35 units, and the quantity of labor demanded is 20 units. Therefore, the unemployment is 35 - 20 = 15 units of labor.

The Following Figure Shows the Labor Demand Curve, LD₁, and Labor