Part 1 Should all professors be paid the same? The graphs here show the supply o
ID: 1169091 • Letter: P
Question
Part 1
Should all professors be paid the same?
The graphs here show the supply of and demand for assistant professors in history (left) and in accounting (right) for a hypothetical university. Use the graphs to help you answer the following questions.
Part 2
Unintended effects of government actions
Suppose that, in an attempt to help the working poor, the government recently passed legislation that increases the minimum wage from $5 per hour to $7 per hour.
The following graph input tool shows the labor market. The horizontal line indicates the initial level of the minimum wage. You can see the effect of the change in the minimum wage law on the market for unskilled labor by changing the value in the Wage box. The values in the boxes on the right side of the calculator will change accordingly. (Note: You will not be graded on any changes made to the graph input tool.)
Market for Assistant History Professors Market for Assistant Accounting Professors 120 Demand 108 96 84 72 60 48 36 24Supply 12 180 Demand 162 144 126 108 90 72 54 36Supply 18 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Assistant history professors) 0 4 8 12 16 20 24 28 32 36 40 QUANTITY (Assistant accounting professors) The equilibrium wage of an assistant professor in history is On the other hand, the equilibrium wage of an assistant professor in accounting is professors in accounting $72,000, and the equilibrium quantity is 20 assistant professors in history. $108,000, and the equilibrium quantity is 16 assistant Suppose the university sets the same wage for all assistant professors in each department. Fill in the following table with the quantity demanded and supplied for each type of assistant professor when the university sets the wage to $72,000 and $108,000, respectively.Explanation / Answer
part1 ) In summary there are fewer assistant accounting professors hired by the universities and more assistant history professors.
This is because when both accounting and history professors are paid the higher wage, $108,000. The market for account professors remains in equilibrium, but a surplus appears in the history professors market. There will be more history professors who want to work at colleges than demanded by the colleges. Thus, more history professors will be hired.
When both accountind and history professors are paid the lower wage, $72,00. The history market remains in equilibrium, but a shortage appears in the accounting professors market. Colleges will demand more accounting professors than will be willing to work at the colleges. Thus, fewer accounting assistant professors will be hired.
part 2
An increase in minimum wages will result in the smaller number of unskilled labors hired. Its unintenteed effect is that some unskilled workers become unemployed. This is because many would want to work at wage of $7 but few firms would want to hire unskilled at this wage; therefore it would create unemployment in the economy.
When government imposes a rent control below the equilibrium rent,many people would want to rent an apartment at that prices, but few landlords could produce an apartment at this price. Therefore this rent control would create a shortage of rental apartments(Demand is more than supply) and also in the lower quality maintenance of the apartments.