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...uilibrium would be reached where the price of labor would be lower than before but the quantity of labor employed would be higher than what was supplied before. In practice, a number of persons that were unemployed or underemployed would now get employment. In short, the price of labor would decrease and the quantity of labor would increase.
3. Do you believe that the minimum wage should be raised in order to provide workers with a better standard of living? Why or Why not?
No, I believe that if the minimum wages are raised there will be increased unemployment. Those that have fewer skills and unskilled workers will lose their jobs. The employers will be compelled to hire fewer workers and the low skilled workers and inexperienced workers will be excluded. In other words the indigent workers will suffer. On the other hand if there is no minimum wages in place the demand and supply for labor will continue to adjust till an equilibrium price is reached. The minimum wage is a price floor in the labor market and all the observations that were made in the context of price floor apply. Just as artificially increasing the price of commodities leads to an increase in the supply of commodities, increasing the minimums wages leads to unemployment. What happens is that those who get jobs at the higher minimum wages earn more than they earned before and their standard of living improves. So, those whose wages increase experience improved standard of living but those who do not get employed suffer.
4. Is the minimum wage law an effective poverty-fighting measure? Discuss at least one alternative policy.
The minimum wage law is not an effective poverty-fighting measure because if the minimum wage is increased, there ...