(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
Now, a union has negotiated a wage of 14 dollars. In this part you are going to analyze how this wage changes unemployment, labor force and employment.
(Description)
If unions bargain with the firms in Profunctia and set a wage rate equal to 14 dollars, what will be the level of employment, the size of the labor force, and the unemployment rate? On the Figure there are graphs of labor supply and demand. Horizontal axis corresponds to the quantity of labor (thousands). Quantity of labor ranges from 0 to 100. Vertical axis corresponds to wage rate (in dollars). Wage rate ranges from 0 to 20 dollars. Two straight lines (supply and demand) are plotted with supply line passing through origin and a point with coordinates (100, 20) and demand line passing through points with coordinates (0,20) and (100,0). Lines intersect at point E (50,10). Additional horizontal line at the wage rate level of 14 is plotted reflecting the union-negotiated wage.
(Speaker)
A wage of 14 dollars is above the equilibrium wage rate of 10 dollars. This will create a surplus of labor. At a wage rate of 14 dollars, the firm will demand fewer workers, but there will be more workers willing to work at the higher wage. The level of employment is equal to the quantity of labor demanded at the wage of 14 dollars. For the economy of Profunctia, a minimum wage of 14 dollars will result in 30000 workers employed.
(Description)
If unions bargain with the firms in Profunctia and set a wage rate equal to 14 dollars, what will be the level of employment? On the Figure there are graphs of labor supply and demand. Two straight lines (supply and demand) are plotted with supply line passing through origin and point with coordinates (100, 20) and demand line passing through points with coordinates (0,20) and (100,0). Lines intersect at point E (50,10). Additional horizontal line at the wage rate level of 14 is plotted reflecting the union-negotiated wage. Line parallel to wage rate axis is plotted through the intersection point of demand and union-negotiated wage lines with coordinates (30000, 14). This line intersects with quantity of labor axis at 30000.
(Speaker)
At a wage rate of 14 dollars, more people are willing to work. The labor force is the sum of employed and unemployed. At a wage rate of 14 dollars, the economy of Profunctia will have 70000 people willing to work, which will be the labor force.
(Description)
If unions bargain with the firms in Profunctia and set a wage rate equal to 14 dollars, what will be size of the labor force? On the Figure there are graphs of labor supply and demand. Two straight lines (supply and demand) are plotted with supply line passing through origin and point with coordinates (100, 20) and demand line passing through points with coordinates (0,20) and (100,0). Lines intersect at point E (50,10). Additional horizontal line at the wage rate level of 14 is plotted reflecting the union-negotiated wage. Line parallel to wage rate axis is plotted through the intersection point of supply and union-negotiated wage lines with coordinates (70000, 14). This line intersects with quantity of labor axis at 70000.
(Speaker)
At a minimum wage of 14 dollars, the economy will employ 30000 workers and have a labor force of 70000. This means the economy has 40000 workers unemployed.
(Description)
If unions bargain with the firms in Profunctia and set a wage rate equal to 14 dollars, what will be the unemployment rate? The interval between two intersection points for the union-negotiated wage line with supply and demand lines correspondingly is labeled as "Unemployment rate is equal to fraction, with 70 minus 30 in the numerator and 30 in the denominator, times 100, which is equal to 57.1 percent".
(Speaker)
The unemployment rate is number of workers unemployed divided by the labor force. At a wage rate of 14 dollars, Profunctia will have an unemployment rate of 40 divided by 70, equals to 0.571 or 57.1 percent.