Question

Discuss the type of price control that a government would implement, if it wishes to impose a national minimum wage. Include in your answer the economic effects of such a price control.
Motivate your answer with the aid

Answer 1

National Minimum Wage denotes the lowest hourly rate that the government permits an employer to pay employees. The government will then implement a price floor if it wishes to impose the national minimum wage. A price floor is the lowest legalized price that can be paid for goods and services. Price floors prevent a price from falling below a certain level, and when set above the equilibrium price, quantity supplied will exceed quantity demanded, resulting in excess supply.