Question: Suppose that the low skill job market is perfectly competitive and
Suppose that the low-skill job market is perfectly competitive and that the equilibrium wage and monthly output in the market absent government interference are $ 4.50 per hour and 1,000,000 hours, respectively. Assume that the demand and supply elasticity equal two and one, respectively. If the federal government mandates a minimum wage of $ 7.25 per hour, explain what happens to producer, consumer, and total surplus. Is there a deadweight loss associated with the mini-mum wage?
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