Assume that the labor market is competitive, where the labor demand curve is strictly downward sloping and the labor supply curve is strictly upward sloping.

(a) Suppose the government imposes a minimum wage on this labor market. Why would the minimum wage cause a deadweight loss (welfare loss)? In what sense is it a loss?

(b) How does the deadweight loss depend on the elasticities of the demand and supply curves? Explain.

(c) If the minimum wage created a deadweight loss, why would the government impose it? Discuss.