(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In hopes of recruiting high quality workers, the firm has decided to set a wage of 16 dollars. In this part you are going to analyze how the higher wage changes unemployment, labor force, and employment.
(Description)
If the concern for retaining workers and encouraging high-quality work leads firms to set a wage rate equal to 16 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 (in 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 16 is plotted reflecting the efficiency wage.
(Speaker)
A wage of 16 dollars is above the equilibrium wage rate of 10 dollars. This will create a surplus of labor. At a wage rate of 16 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 16 dollars. For the economy of Profunctia, a minimum wage of 16 dollars will result in 20000 workers employed.
(Description)
If the concern for retaining workers and encouraging high-quality work leads firms to set a wage rate equal to 16 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 16 is plotted reflecting the efficiency wage. Line parallel to wage rate axis is plotted through the intersection point of demand and efficiency wage lines with coordinates (20000, 16). This line intersects with quantity of labor axis at 20000.
(Speaker)
At a wage rate of 16 dollars, more people are willing to work. The labor force is the sum of employed and unemployed. At a wage rate of 16 dollars, the economy of Profunctia will have 80000 people willing to work, which will be the labor force.
(Description)
If the concern for retaining workers and encouraging high-quality work leads firms to set a wage rate equal to 16 dollars, what will be the 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 16 is plotted reflecting the efficiency wage. Line parallel to wage rate axis is plotted through the intersection point of supply and efficiency wage lines with coordinates (80000, 16). This line intersects with quantity of labor axis at 80000.
(Speaker)
At a minimum wage of 16 dollars, the economy will employ 20000 workers and have a labor force of 80000. This means the economy has 60000 workers unemployed.
(Description)
If the concern for retaining workers and encouraging high-quality work leads firms to set a wage rate equal to 16 dollars, what will be the unemployment rate? The interval between two intersection points for the efficiency wage line with supply and demand lines correspondingly is labeled as "Unemployment rate is equal to fraction, with 80 minus 20 in the numerator and 20 in the denominator, times 100, which is equal to 75 percent".
(Speaker)
The unemployment rate is number of workers unemployed divided by the labor force. At a wage rate of 16 dollars, Profunctia will have an unemployment rate of 60 divided by 80, equals to 0.75 or 75 percent.