Question

Suppose that the equilibrium wage for teachers in Michigan is $15/hour. Also suppose that Michigan raises its minimum wage to $16/hour. Because the equilibrium wage for teachers is (a) lower than or higher than the new minimum wage, we would expect the number of teachers employed to (b) increase, decrease, or stay the same at the new minimum wage. There will be (c) a shortage, a surplus, or no change in the number of teachers.

Answer 1

a. Lower b. Decrease c. Surplus

Step-by-step explanation:

The equilibrium wage rate is $15.

The minimum wage is fixed at $16.

a. The equilibrium wage is lower than minimum wage.

b. The higher minimum wage will lead to reduction in the number of teachers employed as the cost of hiring goes up.

c. There will be a surplus in the number of teachers, as with increased wages, the supply of teachers will be higher than demand.