dolution

 

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

 

               

 

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?