Suppose you are a member of Congress considering raising the minimum wage. You are aware that for un Show more Suppose you are a member of Congress considering raising the minimum wage. You are aware that for unskilled labor the value of marginal product of labor is given by VMP = 6-(0.0001)*E. Sources available to you have also indicated that the supply of unskilled labor is given by w = 2+(0.0003)*E. In order to make an informed vote on the minimum wage bill you need to answer the following questions. Use graphs and be sure to completely explain your answers. a) What is the equilibrium wage rate and level of employment in the unskilled sector? b) The government is proposing a minimum wage of $5.50 an hour. What would be the result of this minimum wage on the labor market? Be specific Show less
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