Question
British Columbia currently imposes a minimum wage policy. This policy is a price floor that limits the price paid for labour from going below wage,
British Columbia currently imposes a minimum wage policy. This policy is a price floor that limits the price paid for labour from going below wage, p0. In the graphical depiction of the market for unskilled labour below, indicate the market price and quantity under the current minimum wage policy. b) If the government removed the policy, indicate the new price and quantity in your graph. c) Label areas on your graph with letters. Using these letters, indicate the levels of Consumer Surplus, Producer Surplus, and Total Surplus under the original minimum wage policy CS0 = __________________________ PS0 = _____________________________ TS0 = _________________________ d) Now indicate the levels of Consumer Surplus, Producer Surplus, and Total Surplus when the minimum wage policy is removed CS1 = __________________________ PS1 = _____________________________ TS1= _________________________ e) From an economic efficiency perspective, is the minimum wage policy good? Explain in reference to your graph. f) Who wins from removing the policy? Who loses from removing the policy? Explain in reference to your graph.
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