Suppose the demand and supply curves for unskilled labor in the Corvallis labor market are as shown in the accompanying figure.
a. By how much will the imposition of a minimum wage at $12 per hour reduce total economic surplus? Calculate the amounts by which employer surplus and worker surplus change as a result of the minimum
b. How much would it cost the government each day to provide an earned-income tax credit under which workers as a group receive the same economic surplus as they do under the $12 per hour minimum wage? (Assume for simplicity that the earned-income tax credit has no effect on labor supply.)