Answer to Question #109561 in Microeconomics for Retang

Question

According to the department of labor's new rates, domestic workers working in a bigger metropolitan areas who work more than 27 ordinary hours per week, must be paid a minimum wage of R13.69p/h
Workers who work fewer hours tha 27 hours per week must be paid minimum of R16.03p/h

With the aid of diagram, discuss the welfare effect of this new legislation of new wage is below the equilibrium wage and 2 above the equilibrium wage rate with labour hours as your quantity variables

Answer 1

Demand for labor will exceed supply, but the value of the proposed wage will lead to a decrease in welfare.

Demand for labor will be much less than supply, the size of the proposed wages will increase the welfare of those who will have work. This situation can cause unemployment in a certain proportion, as entrepreneurs will not be able to hire more workers than the required minimum.