Exhibit 11-4 Supply and demand curves for food servers
-In Exhibit 11-4, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage rate creates a(n):

Question

Exhibit 11-4 Supply and demand curves for food servers 
-In Exhibit 11-4, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage rate creates a(n):

Quizplus · Accepted Answer

The minimum wage rate creates a wage floor above the equilibrium wage rate, resulting in excess supply of labor (unemployment) as more people are willing to supply labor at the higher wage rate but fewer employers are willing to demand labor at that wage rate. This is shown by the vertical distance between the demand and supply curves at the minimum wage of $6.00 per hour, which represents the excess supply of labor (unemployment) of food servers.

Exhibit 11-4 Supply and Demand Curves for Food Servers