The quantity of workers demanded is 160. This drop of 40 workers represents those who lost jobs previously held because of the increase in wages. The number of involuntarily unemployed workers will be the greatest when both the supply of and demand for labor are relatively elastic . The number of involuntarily unemployed workers will be the smallest when both the supply of and demand for labor are relatively inelastic . As you can see from the answer to 2.g., fewer workers are now employed at the higher minimum wage, and those that remain employed suffer a drop in collective incomes.
Price Ceilings Reset all parameters to their default values.
A price ceiling is a legally established maximum price. Sellers who charge, and buyers who pay, a higher price may be fined or imprisoned. When, not if, sellers lower price the quantity demanded will rise and the quantity supplied will fall until the gap between QD and QS is zero. Sellers are aware of this but cannot raise price to pay for an increase in the quantity supplied. 4. Consider this the market for rental housing.