Labor Market:

• Equilibrium is initially at a wage of $25 and Q=25,000

Questions:

1. Suppose the government sets the minimum wage at $18. What is the likely effect from the minimum wage? Explain your reasoning.
2. Suppose the government sets the minimum wage at $40. What is the likely effect from the minimum wage? Explain your reasoning.
3. What is the basic effect, from an effective price floor, in a supply and demand model of a labor market? Why do some politicians and public policy makers, believe that the minimum wage causes more harm than good in a labor market?
4. Graph the market and the subsequent changes in the market on a piece of paper/tablet. Please make sure that you label all of the key points and information on the graph and submit a picture or file of your graph below your short answers into the textbox below. Please make sure that your image is NOT an HEIC or HEIF file. You should upload your image as a JPEG file, PNG file, etc.