Chapter $06$ Problems & Applications

A case study in this chapter discusses the federal minimum$-$wage law.

Suppose the minimum wage is $$6$ per hour in the market for unskilled labor, as shown on the following graph.

Use the grey point $($star symbol$)$ to indicate the market equilibrium wage and quantity of labor in the absence of a minimum wage. Then use the purple point $($diamond symbol$)$ to indicate the level of employment at the minimum wage provided, and use the orange point $($square symbol$)$ to indicate the quantity of labor supplied at this minimum wage. Finally, use the green polygon $($triangle symbols$)$ to show the total wage payments to unskilled workers.

Labor Supplied at Minimum Wage

Total Wage Payments