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The minimum wage is increased from $7.25 to $9.00 per hour. Calculate the elasticity of demand for fast food workers over the relevant portion of the demand curve using the simple formula. Throughout your calculations round to two decimals.

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Answer:

As the question was not complete. I have attached the complete question in the attachment. Please refer to attachment.

Explanation:

By using, LD = 95- 3w and w1 = 7.25 and w2 = 9. We get,

LD1 = 95-3(7.25) = 73.25

LD2 = 95-3(9) = 68

Elasticity = Change in labor demand/ change in wage rate = ((68- 73.25)/ 73.25)/ ((9-7.25/7.25)) = -0.33

The 11 percent change in the wage rate causes, 33% change in labor demanded, as shown by the elasticity, the labor demand decreases with increase in wage rate.

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