Living Wage and Labor Income. Consider a university that has sweatshirts bearing its logo produced overseas by a contractor who initially pays a wage of $8 per sweatshirt and has other costs of $12...

Living Wage and Labor Income. Consider a university that has sweatshirts bearing its logo produced overseas by a contractor who initially pays a wage of $8 per sweatshirt and has other costs of $12 per sweatshirt, resulting in a price of $20 per sweatshirt. At this price, the university sells 100 sweatshirts per week. Suppose a student group succeeds in getting the contractor to increase the wage to $10 per shirt and the other costs of production don’t change.

a. The price per sweatshirt will increase from
to, an increase of
 percent.

b. Suppose the price elasticity of demand for the university’s sweatshirts is 3.0. At the higher price, a total of
 sweatshirts will be purchased and the total spending on sweatshirt labor (total labor income) will change from $
to $
.

c. Suppose consumers are willing to pay a higher price for sweatshirts made by workers receiving a higher wage. How would this change the numbers in part (b)? Provide an example in which the higher wage actually increases the total spending on sweatshirt labor.