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2. Suppose government imposed a minimum wage above what otherwise would be the equilibrium wage rate for this segment of the labor market. Using a supply and demand framework of analysis, what do you expect to happen to employment in this segment of the labor market? (Assume that inflation and economic growth are both zero.)

3. If you were an economist for Mattel, manufacturer of the doll Barbie, which was making an unsolicited bid to take over Hasbro, manufacturer of G.I. Joe, would you argue that the relevant market is dolls, preschool toys, or all toys including video games? Why? Would your answer change if you were working for Hasbro?

4. In what market did Microsoft have a monopoly in the late 1990s? What technological advances threatened that monopoly?

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This solution addresses three business questions addressing minimum wage, unsolicited buds and monopolies

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2. Suppose government imposed a minimum wage above what otherwise would be the equilibrium wage rate for this segment of the labor market. Using a supply and demand framework of analysis, what do you expect to happen to employment in this segment of the labor market? (Assume that inflation and economic growth are both zero.)
If the inflation and economic growth are zero and we are operating on the upward sloping section of curve of demand for labor, as the minimum wage is imposed above the equilibrium wage rate there will be an increase in the supply for labor and there will be a decrease in the demand for labor as the price of labor increases. The result will be that unemployment will increase. There will be fewer persons employed than before as the demand for labor decreases and there will be an increase in the ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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