hw3 minimum wage price floor problem

hw3 minimum wage price floor problem - Ryan Hayes Homework...

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Ryan Hayes ECO 201 Homework #3 October 1, 2009 To: US Chamber of Commerce Subject: Should we vote for or against the increased minimum wage? When we analyze this case, we have to see where it started. Since US labor markets were at equilibrium, the wage was at a high enough for the workers to be at least content with what they earned. Laborers always would be happier with a higher pay though. At $7.35 an hour, companies were willing to offer a comfortable amount of jobs because they felt they could still make a profit. With Congress considering a raise in wages, this is what would happen to all of the factors. The increase of wages from $7.35 to $9.85 causes a new standard hence a price floor. It is a change in quantity demanded. Since everybody must be paid at least $9.85 for their labor, companies are not taking in as many laborers. This could be good because it increases competition for these jobs, which brings in more qualified or more motivated workers to the job market. People who get these jobs (which in the graph is section a in the area between
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hw3 minimum wage price floor problem - Ryan Hayes Homework...

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