Answer to Question #111283 in Microeconomics for Lee-Anne Pillay

Question

According to the dept of Labour domestic workers who work less more 27 hours to be paid R13. 69 per hour. Workers who work less than 27 hours per week to be paid R16.03 per hour.
With the aid of a diagram, discuss the welfare effect of this new legislation if the minimum wage is 1.beliw the equilibrium wage and 2.above the equilibrium wage rate with Labour hours as your quantity variable.

Answer 1

If the minimum wage is established above the equilibrium, the supply exceedes demand and less warkers will be employed.

But if the minimum wage is established below the equilibrium, then there will be no impact on the labor market equilibrium.