1. Draw a supply and demand diagram with the price of labour (the wage rate) on the vertical axis and the quantity of labour (the number of workers) on the horizontal axis. What will happen to employment if the government raises wages from the equilibrium to some minimum wage the equilibrium?

2. Think of some examples where the price of a good or service is kept below the equilibrium. In each case consider the advantages and disadvantages of the policy.

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W minimum wage We surplus S Qd D Q Quantity of workers