Is the CBOs estimate an example of positive economic analysis or normative economic analysis? Briefly explain your answer.

E251-29732, Graded Application Problem Set Two Due no later than 10:00 p.m. Sunday, April 25.

(Submit by uploading your work in the Canvas Quizzes, quiz: Graded Application Problem Set-2)

Page 1 of 2 Additional questions on next page.

Coordinating instructions: This is 2 of 2 graded application problem sets. It is worth up to 6 course percentage points. Both graded application problems sets will be worth up to 6 course percentage points. If you earn greater than 9 course percentage points on the combined graded application problem sets, then any course percentage points earned above 9 will count in your course grade as extra credit. Once you complete your work, create a .pdf file and upload to the canvas quiz called Graded Application Problem Set Two. There will be one question in the quiz for your complete assignment to be uploaded. The submission quiz will open on Wednesday, April 14 and will remain open until 10:00 p.m., Sunday, April 25. What you submit last is the one that is graded. Read the article: Wage Floor of $15 Is Seen as an Obstacle for Teens, By Allison Prang,

appeared in the Wall Street Journal, March 29, 2021, print edition.

The article is available on the Canvas class site on the page Graded Application Problem Sets

After you read the article answer the below questions and create a .pdf file to submit your answers in Canvas quizzes.

Question 1. Although the proposed increase in the federal minimum wage to $15 an hour would lift some workers out of poverty, the Congressional Budget Office (CBO) has estimated that the higher minimum would result in about 1.4 million workers losing their jobs over a four-year period. Is the CBOs estimate an example of positive economic analysis or normative economic analysis? Briefly explain your answer.

Question 2. Draw and label a graph that depicts a demand curve and a supply curve in the market for unskilled labor. Show the minimum wage illustrated as a wage floor at $15 an hour. In your diagram, you should consider the market rate to be below this wage floor. Refer to the graph you drew to answer the previous question. Identify the area in the graph that represents a deadweight loss that would result from the $15 wage floor.

E252-31408, Graded Application Problem Set One

Page 2 of 2

Question 3. From the article: Nicholas Kelloggworks part time at clothing retailer

PacSunhe expects a higher minimum [wage] will make it harder for other teens to join the workforcehe isnt worried about his job security, but his 16-year-old brother doesnt have much experience. For him, he would be one of the first people that would be suffering, Assume that minimum wage does increase to $15 an hour and because of this increase Nicholas Kellogg does not lose his job, but his younger brother does. What would this imply about the marginal revenue products of Nicholas and his brother?

Question 4. Assume that the federal minimum wage is increased to $15 an hour. Would the loss in employment by unskilled workers be greater if the demand for unskilled workers was relatively elastic, or relatively inelastic? Briefly explain your answer.

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