In microeconomics

In microeconomics -...

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In microeconomics, we learned that in an efficient market, the price of a good changes  to equilibrate the quantity demanded and the quantity supplied. The labor market, in its  natural form, is just like any other market. If there are unemployed workers who want  jobs, the price of labor or the wage will simply drop until all of the labor force is  employed. That is, this would happen if there were not government intervention into the  labor market. In order to help maintain a certain standard of living among all workers,  the government implements a minimum wage, which artificially inflates the wages of the  workers at the bottom of the wage scale above what the firm would normally pay at  equilibrium. This in turn causes the people above the minimum wage workers to  demand more pay and for the people above them to do the same. Eventually, the 
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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In microeconomics -...

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