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This week we are going to examine what happens in a market when the government intervenes in the market and introduces price controls. In particular we are going to examine what happens when the minimum wage is increased.
A minimum wage is a Price Floor. When a price floor is imposed on a market the price can be higher than the price floor, but not lower than the price floor.
In the labor market, the price is the wage rate. Thus, a minimum wage above the equilibrium wage increases workers wages, but it also decreases the quantity demanded of labor. In particular, it reduces the quantity demanded of unskilled and low skilled labor, especially youth labor.Assignment Summary:
Will the proposed increase help workers? And if so which part(s) of the labor market will be helped?
Which part(s) of the labor market will hurt by the proposed increase? How will they be hurt?
What will happen to the prices of goods and services produced with minimum wage labor?
MAKE SURE THAT YOU ADD SOMETHING NEW to the discussion.Post on three different days for a minimum of three posts. Failure to meet these minimum posting requirements results in point loss.
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