00:01
The minimum wage is a pretty common intervention into the price system.
00:04
In order to see its effects, what we look at is the labor market.
00:08
And within this labor market here, you can see that our x -axis is our quantity of labor with our y -axis being the wages paid.
00:14
We can see in this depiction that we have an equilibrium, quantity at q -star, and an equilibrium wage at w -star.
00:20
And this is the point at which our quantity supplied of labor is equal to our quantity demanded of labor.
00:27
But now let's suppose that we create a minimum wage.
00:30
Now, if we create a minimum wage that rests above this equilibrium, which is usually where minimum wages tend to lie because the reason we set a minimum wage usually is because the current wages being paid are considered too low.
00:44
So that means that this market clearing wage, this w star right here, is considered too low...