Carefully illustrate (using consumer choice theory) the theoretical impact of the Minimum wage on an individual's labor-surply decisions. First, draw the individual's budget constraint with and without the Minimum Wage. Assume: 

(i) that there are 2000 work-hours in the year; (ii) that the individual can earn $5 per hour without the minimum wage; and (iii) that the minimum wage is $10 per hour. Then, using your illustration, please carefully, succinctly, and thoughtfully discuss how (theoretically) the minimum wage would impact LFP and hours worked. That is, describe how an individual's behavior would change (theoretically) if, at first, there was no minimum wage, and then, the minimum wage was introduced (limit your answer to a total of 75 words or less)?

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I Without Minimum Wage Budget constraint Income hourly wage work hours Maximum income 5ho... View the full answer