Carla H is considering buying a few tablet devices for her bakery so customers can place orders for her signature cupcakes on their own, straight from the counter.

Reason: She fears the $7.25 an hour that she currently pays her 10 customer service employees, could rise, perhaps to $9 an hour under a pledge by President Obama earlier this month.

Key Facts from Article

1. Ms. H believes that the customer-ordering process has to be automated, in order to remain profitable with self-serving tablets
2. The combined cost of two tablets, plus a customized application for displaying products with descriptions and processing orders range from $5,000 - $15,000 to implement
3. Some businesses see a promise in selling technologies to small businesses to help do-away with low-wage workers
4. A $22,000 six-foot-tall robot with flexible arms, a face screen, and rolling pedestals replaces the low-wage workers at small manufacturing firms that can't afford traditionally automated robots that require someone to program it

1. What does our model of price controls studied back in Ch2 say about an increase in the minimum wage and it's effect on the market for labor? Draw in a graph, and explain.

A. The graph must show that you have an initial minimum wage set above the market-clearing wage and what happens at the initial minimum wage.

B. On the same graph depict what happens when the minimum wage is raised. Be sure to label your graph clearly, both the 'price' and quantity axis, along with the shortage or surplus (both for the initial minimum wage and after the new higher minimum wage) of labor.