The governor is concerned about poverty in the state and decided to raise the minimum wage from $7.25/hour to $15/hour. She claims that this would be an effective way to assist low income families, although she is also concerned that the potential loss of jobs due to the new policy will lead to increased unemployment. Assume the market for workers in this state is perfectly competitive and draw a graph showing supply and demand for workers. Demonstrate the effect of the policy on the graph and briefly evaluate the governor's claims.

The governor is concerned about poverty in the state and decided to raise the minimum wage from $7.25/hour to $15/hour. She claims that this would be an effective way to assist low income families, although she is also concerned that the potential loss of jobs due to the new policy will lead to increased unemployment. Assume the market for workers in this state is perfectly competitive and draw a graph showing supply and demand for workers. Demonstrate the effect of the policy on the graph and briefly evaluate the governor's claims.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter14: Labor Markets And Income

Section: Chapter Questions

Problem 1SCQ: Table 14.10 shows levels of employment (Labor), the marginal product at each of those levels, and...

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