From an economic standpoint, evaluate the effect of a minimum wage on the market for low-wage...
Question:
From an economic standpoint, evaluate the effect of a minimum wage on the market for low-wage labor. Include the following:
Discuss what economic theory predicts will happen
Draw a supply and demand graph illustrating the effect of a minimum wage
Discuss what elasticity conditions would economic theory prove to be true or false.
Minimum wage:
It is a government regulation which sets the minimum wages paid to the workers above the equilibrium wage in the market. This is done to benefit the workers. Setting a wage regulation creates excess supply of workers in the labour market as more workers enter the workforce due to higher wages.
Answer and Explanation: 1
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View this answerFrom the graph below it is clear that the equilibrium wage rate is w1 and the equilibrium labour is L1. Now, if the minimum wage is fixed at MW, which...
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What is a Minimum Wage? - Definition & History
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Chapter 7 / Lesson 12
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Understand the minimum wage definition in economics. Discover the history of minimum wage in the U.S., and explore the advantages and disadvantages of imposing a minimum wage. Learn the difference between federal and state minimum wage.
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