Question

Suppose that the equilibrium wage for teachers in Minnesota is $15/hour. Also suppose that the state of Minnesota raises their minimum wage to $10/hour. Since the equilibrium wage for teachers is ____________ the new minimum wage, we would expect the number of teachers employed to _____________________ and the equilibrium wage for teachers to ______________________.

Answer 1

higher than; remain unchanged; remain unchanged

Step-by-step explanation:

The equilibrium wage of $15/hour for teachers is higher than the new $10/hour minimum wage. After this development we would expect the the number of teachers employed to remain unchanged, unless the marginal revenue product of hiring teachers is greater than the wage rate of $15 (ie the individual teacher revenue output is greater than their individual wage)

The equilibrium wage remains unchanged, unless there becomes an increase in the supply of teachers.

Answer 2

higher than; stay the same; stay the same

Step-by-step explanation:

Since the equilibrium wage for teachers is higher than the new minimum wage, we would expect both number of teachers employed and the equilibrium wage of teachers to remain thesame. The new minimum wage is nonbinding, thus it doesn't affect the the equilibrium wage of teachers, hence why it remains the same. Also, since the minimum wage of teachers is higher, the number of employed teachers is expected to remain the same.