Answer in Microeconomics for Thato #111027
April 21st, 2023
1)Suppose that the government decided to set the minimum wage below equilibrium, then we get the following diagram:
Such wages will not meet the expectations of some workers, they will not agree to perform this work for a given wage.
2) However, the government can decide to establish a minimum wage higher than the equilibrium, then we get the following diagram:
Now, on the part of employers, job cuts are possible, as their financial expectations correspond approximately to the level of equilibrium wages. This decision of the government will lead to the fact that part of the workers in this sector will become unemployed.