Answer in Microeconomics for Busisiwe #111571
April 21st, 2023
If the new legislation imposes a minimum wage that is above the equlibrium, it creates a gap between the quantity demanded and the quantity supplied.This is becausefirms wish to purchase only fewer hours of labor—firms want to hire fewer labour hours. In a market with voluntary trade, no one can force firms to hire workers. This surplus is known as unemployment. At the high minimum wage, we would have more workers wanting to work than we would have firms wanting to employ them.