Minimum wage Flashcards
1
Q
Min. wage diagram
A
2
Q
min. wage analysis
A
- raises wage rate
- employers must now pay workers wmin or above
- new labour supply
- employment fall ql1 to qd1
- caused by a free market wage
- correction = more allocatively efficient
- reduce welfare loss
3
Q
ignore this
A
- encourages willingness to supply higher price
- ensure minimum price for suppliers
4
Q
evaluation of minimum wage
A
- not necessarily cause une,ployment if productivity increases increased wages and increased employment
- rise in firms cost of production some firms leave
- extent of unemployment dependent on level of wage
