Post by: xxxxxxxxxxxx on Nov 23, 2022
The graphs show the supply and demand curves for aircraft mechanics and elevator mechanics.
Assume that P1=$32.00, P2=$41.00, P3=$50.00, Q1=115, Q2=375, Q3=450, Q4=135, Q5=280, and Q6=295. Suppose the government approves a law that requires both groups of workers to be paid $50.00 an hour. This results in a ________ (decrease/increase) in employment of aircraft mechanics by ________ and a ________ (decrease/ increase) in employment of elevator mechanics by ________.
◦ decrease, 75, increase, 15
◦ decrease, 260, decrease, 145
◦ increase, 260, increase, 15
◦ increase, 75, decrease, 145
Post by: sadoniam on Nov 23, 2022
The market equilibrium occurs where the supply curve (S) intersects the demand curve (D).
In the market for aircraft mechanics, the market equilibrium price is P3=$50.00 and the market equilibrium quantity is Q2=375.
In the market for elevator mechanics, the market equilibrium price is P1=$32.00 and the market equilibrium quantity is Q5=280.
If the government approves a law that requires both groups of workers to be paid $50.00 an hour, this sets a price ceiling in the market for aircraft mechanics and a price floor in the market for elevator mechanics.
In the market for aircraft mechanics with the price ceiling, Q1=115 mechanics are supplied and Q3=450 mechanics are demanded. This results in a shortage of aircraft mechanics.
The new law decreases employment in the market for aircraft mechanics from Q2=375 to Q1=115, or by 260 workers.
In the market for elevator mechanics with the price floor, Q4=135 mechanics are demanded and Q6=295 mechanics are supplied. This results in a surplus of elevator mechanics.
The new law decreases employment in the market for elevator mechanics from Q5=280 to Q4=135, or by 145 workers.