Consider the accompanying figure representing the labor market below. Suppose the government passes a minimum wage requiring employers to pay at least $8.00 per hour. Prior to the imposition of the minimum wage, employer surplus is ________ per day, and after the imposition of the minimum wage, employer surplus is ________ per day.

Question

Consider the accompanying figure representing the labor market below. Suppose the government passes a minimum wage requiring employers to pay at least $8.00 per hour.  Prior to the imposition of the minimum wage, employer surplus is ________ per day, and after the imposition of the minimum wage, employer surplus is ________ per day.

Quizplus · Accepted Answer

Prior to the imposition of the minimum wage, employer surplus is given by the area below the demand curve above the equilibrium wage of $6.00 per hour, or ½ × 6,000 × $3 = $9,000 per day. After the imposition of the minimum wage, employer surplus is given by the area below the demand curve above the minimum wage of $8.00 per hour, or ½ × 2,000 × $1 = $1,000 per day.

Consider the Accompanying Figure Representing the Labor Market Below