Explain the effects of the higher minimum wage on the workers’ surplus and the firms’ surplus.

Does the labor market become more efficient or less efficient? Explain.

The rise in the federal minimum wage will boost the wages of the lowest-paid U.S. workers from $5.15 to $7.25 an hour. Republican leaders, backed by smallbusiness and restaurant groups, argued that the higher minimum wage would cripple the economy, so it must be accompanied by tax cuts for small businesses.