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Aug 6th, 2022
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How to Diagram Wage Work For Free

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all right this video is going to show how to graph a minimum wage or price floor so we begin with our standard supply and demand graph but this is a little different because its a labor market so the demand here is with respect to firms demanding labor and the supply is us were willing to supply labor in exchange for a wage so this price could also be marked as a wage now the way a minimum wage works is the government steps in and says you cannot pay someone lower than the minimum wage so in essence its a price floor meaning you cannot have a price under that amount and there are three different outcomes we could have a minimum wage above the equilibrium wage and in that case firms would only demand this much labor well people would be willing to supply this much and that would end up with a shortage or a surplus rather in the market because quantity supplied is greater than quantity demanded we could also have a minimum wage that goes right through the equilibrium and in that case

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