(a) Calculate the unemployment rate in Fairland using Table 1.
= 26.57% or 26.69%
(b) Outline 2 difficulties in measuring unemployment.
·Discouraged workers/Hidden Unemployment – some people who are able and willing to work have become discouraged and have given up looking for work.
·Underemployed – do not full utilize their time (involuntary part-time workers) skills/experience.
·Unemployment Fraud – Claims by those who seek to obtain unemployment benefits, or those in the informal labor market seeking to avoid tax that distort the official unemployment statistics.
·Unemployment Averaging – the unemployment figure is an average and ignores regional, ethnic, age, and gender disparities.
(c) Draw and label a curve that illustrates Fairland’s minimum wage on figure 6.
(a) Calculate the resulting unemployment among low-wage workers.
At a minimum wage (price floor) of $10
Only 14m workers will be employed while 40m will supply their labor
Therefore there will be a surplus of workers of 26m = 40m – 14m
Surplus workers means – unemployed workers.
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