Draw a labor market in original equilibrium.

  1. Draw a labor market in original equilibrium. Label the vertical and horizontal axes and label the initial demand for labor as D0, the initial supply of labor as S0, the initial wage rate as W0, and the initial quantity of labor as Q0. Label this Graph B
  2. A government passes a family-friendly law that no companies can have evening, nighttime, or weekend hours so that everyone can be home with their families during these times. Analyze the effect of this law using a demand and supply diagram for the labor market assuming that wages are sticky downward. Be sure to indicate the direction of any shifts that might occur. Explain what is likely to happen to unemployment and wages.

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