Exhibit 10-3 Supply and demand curves for food servers

-In Exhibit 10-3,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 10-3 Supply and demand curves for food servers
 
-In Exhibit 10-3,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 of $6.00 per hour creates a floor under wages, which forces employers to pay their workers at least $6.00 an hour. This increase in the wage rate will cause the supply of labor to increase as more people will be willing to work at this wage rate. However, the demand for labor will decrease, as employers may not be willing to hire as many workers at the higher wage rate. As a result, there will be an excess supply of labor or unemployment in the market, leading to choice C.

Exhibit 10-3 Supply and Demand Curves for Food Servers