Answer to Question #315726 in Macroeconomics for Isay

Question

Demand and supply conditions in the market for unskilled labor are important concerns to business and government decision makers. Illustrate in a supply/demand diagram, by shifting the supply curve appropriately, the effect on the supply of unskilled labor a result of: 

A. An increase in the quality of secondary education 

B. A rise in welfare benefits 

C. An increase in the popularity of self-service gas stations, car washes, and so on D. An increase in the minimum wage

Answer 1

a)Increase in the quality of secondary education will lead to more people acquiring more skills thus reducing the number of unskilled labor force in the market. Thus the supply for unskilled labor force in the market will shift from S0S0 to S1S1.

b)Rise in welfare benefits for unskilled labor force in the market will make more not to advance in their studies because their needs are well catered. Therefore, many people will go for those jobs thus increasing their supply from S0S0 to S2S2.

c)An increase in the self services in the economy means many will be rendered jobless. This will lead to low or no demand for the unskilled labor force in the market leading to a low supply of them. This will lead to shift in demand from DODO to D1D1.

d)Increase in the minimum wage for workers will lead to many people demanding for those jobs. This will lead to a shift in the demand curve from D0D0 to D2D2.