Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.There is a minimum wage set at $16 per hour.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.The result is
A)elimination of teenage unemployment and a wage rate of $17 per hour.
B)elimination of teenage unemployment,but the wage rate remains at $16 per hour.
C)some teenage unemployment with the wage rate remaining at $16 per hour.
D)no change in teenage unemployment because the wage rate rises to $17 per hour.
E)a surplus of teenage labour.

Question

Use the table below to answer the following questions.
Table 6.2.1 
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.There is a minimum wage set at $16 per hour.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.The result is
A)elimination of teenage unemployment and a wage rate of $17 per hour. 
B)elimination of teenage unemployment,but the wage rate remains at $16 per hour. 
C)some teenage unemployment with the wage rate remaining at $16 per hour. 
D)no change in teenage unemployment because the wage rate rises to $17 per hour. 
E)a surplus of teenage labour.

Quizplus · Accepted Answer

The new fast food restaurant increases the quantity demanded of teenage labour by 400 hours per week at each wage rate. This means that the demand curve will shift to the right by 400 hours. At the minimum wage of $16 per hour, the quantity demanded will now be 1,200 hours, which is greater than the quantity supplied of 1,000 hours. This means that there will be a shortage of teenage labour at the minimum wage, and the wage rate will rise. However, the wage rate will not rise to $17 per hour, because the quantity supplied will also increase as the wage rate rises. The new equilibrium wage rate will be somewhere between $16 and $17 per hour, and there will be no teenage unemployment.

Use the Table Below to Answer the Following Questions