Project #92652 - Micro-Economics

GRADED EXERCISE Three 

MICRO ECONOMIC PRINCIPLES COURSE ECO2023

 

INSTRUCTIONS:  Download the article “Minimum Wages”; Pushes Economy into the Unknown.

USE DEMAND & SUPPLY DIAGRAMS TO ILLUSTRATE YOUR ANSWERS

Friedman: Minimum wage law always has two sponsors: the well –meaning who wish to enhance the wellbeing of the poor and the special interests that use the wellbeing sponsors as front men.

Question 1: Indicate who you believe are the well-meaning “do-gooders” behind the move to install the federal $15 as the minimum hourly wage; indicate what their intensions to do well are and who are the special interests. 

Question 2: Draw a diagram of the labor market to which the minimum wage is applicable. Indicate the “before and after” the $15 an hour minimum wage has been introduced

 

 

 

 

 

Professor Donald Boudreaux: “Unions want the steep rise in the minimum wage to $15 an hour because they agree that it will destroy jobs for many low-skilled workers. Because for many tasks a smaller number of skilled workers can substitute for a larger number of low –skilled workers, the greater is the number of low –skilled workers artificially priced out of jobs by the minimum wage, the greater is the artificial increase in demand for skilled unionized workers. Minimum-wage legislation is, in short, a manifestation of cronyism.”

Question 3 Do you agree with Professor Boudreaux that this is the strategy of the unions? Outline the likely outcomes of imposing higher minimum wages on the growth of the underground economy.

Professor Alan Krueger: “The push for a nationwide $15 minimum wage strikes me as a risk not worth taking. Economics is all about understanding trade-offs and risks. The trade-off is likely to become more severe, and the risk greater, if the minimum wage is set beyond the range studied in past research.”  

 Question 4: What are the tradeoffs Kruger is referring to?

 

 

 

 

 

GRADED EXERCISE 3

MICRO ECONOMIC PRINCIPLES COURSE ECO2023

Instructions: Please download the article: “New York City Board Votes to Freeze Regulated Rents”

Consult Chapter 6 (Supply, Demand and Government Policies) in the textbook, particularly the case study, Rent Control in the Short and Long Run (pages 115-116).

Use Demand and Supply Diagrams to illustrate your answers.

The Rent Guidelines Board of NYC voted in June 2015 to freeze one-year leases. This was an unprecedented move in its 46 year old history. The Rent Guidelines Board of NYC regulates more than one million rent-stabilized apartments in NYC. 

Mayor Bill de Blasio: “We know tenants have been forced to make painful choices that pitted ever-rising rent against necessities like groceries, child care and medical bills. Today’s decision means relief”. 

Joseph Strasburg, President of the Rent Stabilization Association (of 25,000 landlords) called the rent freeze an “unconscionable, politically driven decision to carry out de Blasio’s campaign promise of two years ago.” 

Question 1

Draw: A supply and demand diagram of rental accommodation a) Before the freeze and b) After the freeze.

 

 

 

 

Question 2

Draw: A supply and demand diagram of rental accommodation in the long run (say two to three years’ time)

 

 

 

 

 

Question3

Explain the shape (elasticities) of supply and demand in your two diagrams.

 

 

 

 

 

 

Question 4

 

Identify the winners and losers of the rent-control policy in NYC. 

 

 

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Due By (Pacific Time) 11/12/2015 01:00 pm
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