ECON111 Microeconomic Principles Study Material

Running head: ECON111 MICROECONOMIC PRINCIPLES
ECON111 Microeconomic Principles
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ECON111 MICROECONOMIC PRINCIPLES
Table of Contents
Answer 1....................................................................................................................................3
Answer 2....................................................................................................................................3
Answer 3....................................................................................................................................3
Answer 4....................................................................................................................................4
Part 4i)....................................................................................................................................5
Part 4ii)...................................................................................................................................5
Part 4iii)..................................................................................................................................5
Answer 5....................................................................................................................................6
Part 5i)....................................................................................................................................6
Part 5ii)...................................................................................................................................6
Answer 6....................................................................................................................................6
Part 6i)....................................................................................................................................7
Part 6ii)...................................................................................................................................7
Part 6iii)..................................................................................................................................7
Part 6iv)..................................................................................................................................8
Part 6v)..................................................................................................................................8
Answer 7....................................................................................................................................8
Part 7i)....................................................................................................................................8
Part 7ii)...................................................................................................................................9
Part 7iii)..................................................................................................................................9

ECON111 MICROECONOMIC PRINCIPLES
Answer 8....................................................................................................................................9
Part 8i)....................................................................................................................................9
Part 8ii)...................................................................................................................................9
Part 8iii)................................................................................................................................10
Part 8iv)................................................................................................................................10
Answer 9..................................................................................................................................10
Answer 10................................................................................................................................10
Answer 11................................................................................................................................11
Answer 12................................................................................................................................11
References................................................................................................................................12

ECON111 MICROECONOMIC PRINCIPLES
Answer 1
A minimum wage is the lowest amount of payment that the employer needs to pay to the
employee (i.e. the wage earners) for a set period of time which cannot further reduced by an
set of contract or agreement (Jardim et al. 2017). Binding minimum wage is set above the
wage equilibrium level where the firms are forced to pay and are not willing to hire at this
particular wage.
Answer 2
As per Australia’s national workplace relations tribunal (“Fair Work Commission”), the
minimum wage rate for an adult is $18.93 per hour and if calculated based on a week of 38
hours, then it would be $719.20 per week (FWC 2018).
Answer 3
To calculate equilibrium wage rate, labour demand and labour supply should be equal for
hours of labour.
Here, Labour demand = Labour supply
1,500,000 – 60,000W = 120,000W – 1,200,000
 120,000W + 60,000W = 1,500,000 + 1,200,000
180,000 = 2,700,000
W = 2,700,000/180,000 = 15
Unskilled labour at the existing wage rate can be given as
=1,500,000 – 60,000W
= 1,500,000 – 60,000 * 15
= 1,500,000 – 900,000