Match the following scenarios with their effects on the labor market: Minimum wage above equilibrium wage | Surplus of labor; Increase in demand for labor | Left shift in labor sup... Match the following scenarios with their effects on the labor market: Minimum wage above equilibrium wage | Surplus of labor; Increase in demand for labor | Left shift in labor supply; Difficult licensing policies | Wage rates fall; Reduction in the demand for labor | Wage rates rise.
Understand the Problem
The question is asking to match specific scenarios related to labor market changes with their corresponding effects. This involves understanding how minimum wage laws, demand and supply for labor, and licensing policies impact wage rates and labor surplus.
Answer
Match the scenarios as follows: Minimum wage above equilibrium wage leads to a surplus of labor; Increase in demand for labor leads to wage rates rise; Difficult licensing policies cause a left shift in labor supply; Reduction in demand for labor results in wage rates fall.
The final answer is:
- Minimum wage above equilibrium wage | Surplus of labor
- Increase in demand for labor | Wage rates rise
- Difficult licensing policies | Left shift in labor supply
- Reduction in the demand for labor | Wage rates fall
Answer for screen readers
The final answer is:
- Minimum wage above equilibrium wage | Surplus of labor
- Increase in demand for labor | Wage rates rise
- Difficult licensing policies | Left shift in labor supply
- Reduction in the demand for labor | Wage rates fall
More Information
When the minimum wage is above the equilibrium wage, it usually results in a surplus of labor (unemployment) because employers hire fewer workers at the higher wage. Increased demand for labor typically raises wage rates as employers compete for workers. Difficult licensing policies can restrict supply, causing a leftward shift in the labor supply curve. On the other hand, reduced demand for labor often leads to falling wage rates.
Tips
A common mistake is to confuse the effects of demand and supply shifts in labor markets with wage changes. Ensure to differentiate whether the scenario affects demand or supply.
Sources
- 4.1 Demand and Supply at Work in Labor Markets - UH Pressbooks - pressbooks.oer.hawaii.edu
- The Minimum Wage and the Labor Market - clevelandfed.org
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