With the aid of a diagram, discuss the welfare effect of this new legi

1.	With the aid of a diagram, discuss the welfare effect of this new legislation if the new minimum wage is (1) below the equilibrium wage and (2) above the equilibrium wage rate with labour hours as your quantity variable?
Answer» EXPLANATION: If the new minimum wage is set below the equilibrium, then there will be no impact on the LABOUR market equilibrium. However if the minimum wage is set above the equilibrium, the supply exceeds demand and less WORKERS will be employed for jobs and there can be an imbalance in labour market, some would GET good wage while others won’t have the WORK to do.

With the aid of a diagram, discuss the welfare effect of this new legislation if the new minimum wage is (1) below the equilibrium wage and (2) above the equilibrium wage rate with labour hours as your quantity variable?

Answer»

If the new minimum wage is set below the equilibrium, then there will be no impact on the LABOUR market equilibrium.

However if the minimum wage is set above the equilibrium, the supply exceeds demand and less WORKERS will be employed for jobs and there can be an imbalance in labour market, some would GET good wage while others won’t have the WORK to do.

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With the aid of a diagram, discuss the welfare effect of this new legislation if the new minimum wage is (1) below the equilibrium wage and (2) above the equilibrium wage rate with labour hours as your quantity variable?

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