Using a diagram of the labor market, show the effect of an increase in the minimum wage on the w

step 1 in question seven this easy. It says that use a dark room off the labor market and show the effe

Using a diagram of the labor market, show the effect of an...

Key Concepts

Labor Market Diagram

A labor market diagram is a graphical representation that illustrates how wages (the price of labor) are determined by the interactions of labor supply and labor demand. It shows the equilibrium point where the quantity of labor supplied by workers meets the quantity of labor demanded by employers, providing a visual framework to analyze changes such as policy interventions.

Minimum Wage

A minimum wage is the legally mandated lowest hourly wage that employers are allowed to pay workers. When set above the market equilibrium wage, it functions as a binding price floor that prevents wages from falling to their natural equilibrium level, thereby affecting the overall functioning of the labor market.

Supply and Demand in the Labor Market

The concepts of labor supply and labor demand are central to understanding how wages and employment levels are determined. The labor supply curve represents the number of workers willing and able to work at different wage levels, while the labor demand curve shows the number of workers that employers are willing to hire at those wages. A policy change like an increased minimum wage can cause a divergence between supply and demand, leading to market imbalances.

Unemployment

Unemployment in the context of the labor market occurs when there is an excess supply of labor; that is, more workers are willing to work at the imposed wage rate than there are job opportunities available. A binding minimum wage above the equilibrium wage typically results in a higher number of workers seeking jobs (increased supply) and a lower number of jobs available (decreased demand), thereby creating unemployment.

Transcript

00:01 In question seven this easy.

00:02 It says that use a dark room off the labor market and show the effect of the increase in the minimum wage on the wage paying two jokers and the number of workers supplied and the number of workers demanded in the amount of unemployment.

00:21 So we first draw a diagram ofthe labor supply and demand.

00:31 So there are two cases.

00:34 Ah, this is supply and this is a demand.

00:38 So say that the equilibrium price and i'm so sorry.

00:43 The y axis iss wage, which is the price of the labor and ah x axis is just how many workers to higher so the quantity of labor.

00:54 So now the the equilibrium, wage and labor quantity is like at this point, so say now, we the government said, ah, minimum wage that isthe lower and the librium wage.

01:12 So this is the blue wage here is set by the government, while the black way here is the original equally print.

01:24 So is this minimum wage going to affect the labor market? well, the answer is no, because thie equilibrium wages here, so no one is going to said any wage that is a cz lowers what the government says because under this amount, people are welling tio.

01:48 I'm supplying this number off labor and the firm demand this number off leaper toe under this wage, it is too low comparing to the equally grim wait, so they're going to like under the wage demanded our sorry, the labor demanded is going to decrease and some supplies going to increase.

02:11 So they were interested and this equilibrium so when the minimum which is lower than the equilibrium wage, this is not going to affect the market.

02:21 So question seven is asking us in port is the effect of an increase in the minimum wage.

02:28 So if the minimum which now increase to this w prime here so it is an increased rate maybe say from $15 an hour to $16 an hour, which is still lower than the market.

02:45 Iqaluit.

02:45 So this new law is not going to change anything.

02:50 But what if another situation is that our minimum wage is higher and ah, then the original equilibrium...

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