Answer to Question #244542 in Management for Arpit

Question

Assume the government again passes policy introducing a $15 minimum wage. Label the new quantity demanded, quantity supplied. Is there a shortage or a surplus of labour? By how much?

Answer 1

The higher minimum wage means that more people would like jobs. The increase in the amount of labor that people would like to supply and the decrease in the amount of work that firms demand both serve to increase unemployment. This means that the label of demand and supply will rise, whereas a surplus of delivery will be determined by the increased wage leading to unemployment.