Minimum wage legislation

The following graph shows the labour market in the fast-food industry in the fictional town of Supersize City.

Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph.

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

09018027036045054063072081090020181614121086420WAGE (Dollars per hour)LABOUR (Thousands of workers)DemandSupply

Graph Input Tool

Market for Labour in the Fast-Food Industry
	Wage (Dollars per hour)
	Labour Demanded (Thousands of workers)			Labour Supplied (Thousands of workers)

In this market, the equilibrium hourly wage is

, and the equilibrium quantity of labour is

workers.

Suppose a member of Parliament introduces a bill to legislate a minimum hourly wage of $6. This type of price control is called a .

For each of the wages listed in the following table, determine the quantity of labour demanded, the quantity of labour supplied, and the direction of pressure exerted on wages in the absence of any price controls.

Wage	Labour Demanded	Labour Supplied	Pressure on Wages
(Dollars per hour)	(Thousands of workers)	(Thousands of workers)
8
12

True or False: A minimum wage below $10 per hour is not a binding minimum wage in this market. (Economists call a minimum wage that prevents the labour market from reaching equilibrium a binding minimum wage.)

True

False