Microeconomics 2

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This week we are going to examine what happens in a market when the government intervenes in the market and introduces price controls. In particular we are going to examine what happens when the minimum wage is increased.

A minimum wage is a Price Floor. When a price floor is imposed on a market the price can be higher than the price floor, but not lower than the price floor.

In the labor market, the price is the wage rate. Thus, a minimum wage above the equilibrium wage increases workers wages, but it also decreases the quantity demanded of labor. In particular, it reduces the quantity demanded of unskilled and low skilled labor, especially youth labor.

Assignment Summary:

View the two videos above and videos 1, 2 and 7 under the Week Two Videos. You may also wish to view the other videos for a deeper understanding of price controls.

Visit The Faces of <5 for more perspectives on a $15 minimum wage.

Read Chapter 6 in your textbook in careful detail.Pay close attention to the graphs in Figures 1 – 5. Focus on Figure 5 in particular https://www.facesof15.com/

You may also wish to review theCBO Report CBO Report (See attached) – Alternative Formats on employment and income impacts of an increased minimum wage.

Read Should the Minimum Wage Be $15 an Hour? on pages 120 – 121 in the text.

Based on the videos, the readings and any additional research you decide to do (remember to cite and reference all your sources) what you do think will be the market impact(s) of the proposed increase in the federal minimum wage to $15 per hour?

Will the proposed increase help workers? And if so which part(s) of the labor market will be helped?

Which part(s) of the labor market will hurt by the proposed increase? How will they be hurt?

What will happen to the prices of goods and services produced with minimum wage labor?

What is your conclusion? Is this proposal a good idea or not? Explain why.

Post your views to the discussion board and refer to at least two different concepts from this week’s Chapters. Your illustration of concepts MUST include an explanation why you think they are are relevant to the week’s topic using specific information from the articles, videos and other research that you have done.

Each post submitted should be between 150 and 250 words. Keep them short, specific, and clear.

Use paragraphs as appropriate.

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Order Description
Part A
Imagine that it is the year 2199. Technology has progressed at an incredible pace. The latest discovery is the plutonium engine, which is capable of converting plutonium, a by-product of nuclear fission, into fuel to power the nuclear reactors in our new form of transportation, the rocket-car. However, because the firm that invented the engine, the Futures Unlimited Corporation, already has a government license to control and distribute the quantity of this certain isotope of plutonium on the market, it is now conceivably in charge of a monopoly on plutonium-fueled transportation.
1. Describe the economic outcome of this single-price monopoly in terms of profit. Provide one (1) supporting fact to support your response.
2. Describe one (1) way that the Futures Unlimited Corporation makes output and price decisions.
Part B
1. Would consumers benefit more from a tariff or a quota on imports? Provide one (1) supporting fact to support your response.
2. Consider the following weekly production possibilities of gloves and hats in Panama and Russia:
Russia Panama
Gloves 20 180
Hats 80 90

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Posted in Uncategorized