Answer to Question #140455 in Microeconomics for jane mogotlhwane

Question

Provide a discussion on the welfare effect of the above, that illustrates the case for when the above results in
unemployment in the market for domestic workers as well as a case for when the above has no effect on the
market for domestic workers. Use a diagram to support your discussion.

Answer 1

The unemployment in the market for domestic workers means, that the demand for domestic workers is lower than the supply, so the equilibrium wages should decrease.