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Chapter 5: Problem 7

Suppose three McDonald's restaurants operate in your town, and each pays its employees \(\$ 6\) per hour. If McDonald's started paying \(\$ 9\) per hour to its employees, would more, fewer, or the same number of people want to work for McDonald's, according to the law of supply?

Short Answer

Expert verified
More people would want to work for McDonald's if it started paying \(\$9\) per hour to its employees, according to the law of supply.

Step by step solution

01

Understanding the wage increase

In this case, it's given that McDonald's originally pays its employees \(\$6\) per hour. Then, it's stated that the wage is increased to \(\$9\) per hour.
02

Applying the law of supply to the wage increase

Based on the law of supply in labor economics, if the wage increases, more individuals would be willing to work because they now get rewarded more for their work.
03

Drawing conclusion

Therefore, if McDonald's increases the pay rate from \(\$6\) to \(\$9\), more people would want to work for McDonald's, according to the law of supply.

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Most popular questions from this chapter

Use the term quantity supplied correctly in a sentence. Use the word supply correctly in a sentence.

The previous section explained how a supply curve can be vertical. If a supply curve is vertical, does it follow that supply is (a) elastic, (b) inelastic, (c) unit-elastic, or (d) none of the above? Explain your answer.

Do all supply curves graphically represent the law of supply? Explain your answer.

Define: a. elastic supply b. inelastic supply c. per-unit cost d. subsidy e. quota f. technology

If supply increases, does the supply curve shift to the right or to the left?
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