When the minimum wage is set above the equilibrium wage rate, the ...

[Redwolflake15]

When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.
 
  A) supply of labor; minimum wage
  B) demand for labor; supply of labor
  C) supply of and demand for labor; the minimum wage
  D) demand for labor; minimum wage

Question 2

With no change in labor productivity, what would happen to the real wage rate and potential GDP if the population increased?
 
  What will be an ideal response?

[miss_1456@hotmail.com]

Answer to Question 1

D

Answer to Question 2

An increase in population increases the supply of labor. As a result, the labor supply curve shifts rightward. Neither the labor demand curve not the production function shifts. The increase in the supply of labor means that employment increases and the real wage rate falls. The economy moves along its (unchanged) production function to a higher level of potential GDP.

[Redwolflake15]

Excellent

[deja]

Thanks for the timely response, appreciate it