For more on the minimum wage see 3 reasons the 15 minimum wage is a bad way to help the poor.
The minimum wage is an example of a price floor a true b false.
In modern western countries labor is the primary recipient of price floors 1 in particular the government imposes a minimum wage making it illegal for an employer to pay a worker less than a certain amount per hour.
In those states that impose such a minimum wage it is more likely that the minimum wage acts as a binding.
Because this is the most popular and recognizable example of a price floor we will concentrate on it for the rest of this.
True studies by economists have found that a 10 increase in the minimum wage decreases teenage employment by 10.
A surplus may result in an alternative rationing mechanism being developed.
It sets the lowest legal wage rate.
Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.
The minimum wage is an example of a price floor.
A price floor causes excess demand resulting in the need to ration by some means other than price.
When a binding price floor is imposed on a market for a good some people who want to sell the good cannot do so.
An example of a price floor is minimum wage laws where the government sets out the minimum hourly rate that can be paid for labour.
A price floor sets the lowest legal price and that is precisely what a minimum wage does.
In a labor market a minimum wage is an example of a price floor.
Like price ceilings price floors disrupt market cooperation and have consequences quite different from those advertised by their advocates.
Price floor causing excess supply in the market.
A binding price ceiling is best defined as a price.
In this case the wage is the price of labour and employees are the suppliers of labor and the company is the consumer of employees labour.
51 if we define unemployment as a surplus of labor then a minimum wage set above the market clearing wage will increase the level of unemployment.
The minimum wage is an example of a price floor.
Before considering an example of price floors minimum wages let s examine the problem in general terms.
A tax on buyers increases the size of a market.
48 minimum wage is an example of a price floor.
50 an excess supply occurs at prices below the equilibrium price.
See how much you know about price controls by answering true or false to these questions.
A true b false 49 a minimum wage set below the market equilibrium wage will result in higher unemployment.
The minimum wage is an example of a price ceiling.
A non binding price floor causes a change in the market price.
Tariffs increase equilibrium price and quantity.
