dolution

 

1. Suppose the following diagram shows the market for fast-food workers in British Columbia. Assume there is no legislated minimum wage.

 

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a. The supply curve is upward sloping. If the wage in this industry rises, where do the extra workers come from?

 

b. Suppose there is a significant decrease in demand for fast food. How is this likely to affect the earnings of fast-food workers? Show this in the diagram.

 

c. Now suppose new legislation bans the assignment of homework to high school students. As a result, more students look for jobs in the fast-food industry. How will this affect the labour market for fast-food workers? Show this in the diagram.

 

d. What will be the effect on total earnings in the fast-food industry from the change in part (c)? On what does the answer depend?

 

 
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