Question: Q3 . Decision-Making and Scarcity (I & II) (L3 & L4) There has been a long debate in economics on the virtues of a 'minimum

Q3.Decision-Making and Scarcity (I&II) (L3 & L4)

There has been a long debate in economics on the virtues of a 'minimum wage', e.g. see:

Lempinen, Edward (2021), "A $15 minimum wage would cost jobs, right? Probably not, economists say", UC Berkeley, March 18th, available: https://news.berkeley.edu/2021/03/18/a-15-minimum-wage-would-cost-jobs-right-probably-not-economists-say/

Your tasks for Q3 are as follows:

Put yourself in the shoes of Cristian Cardona, an employee at McDonald's in Florida US, as mentioned in this article:

Wiseman, Paul (2021) "Biden's $15 minimum wage: Would it lift up the poor or kill jobs?", Chicago Tribune, February 17th, available: https://www.chicagotribune.com/business/ct-biz-biden-15-minimum-wage-cost-benefit-20210217-57psbv5675a77fmkfmvmusmhjm-story.html

Cardona's current (2021) hourly wage is $11. However, there have been efforts under the Biden administration to raise the minimum wage to $15 per hour in the near future. Based on this discussion and economic theory, analyse the case for fast-food workers like Cristian Cardona, explaining in detail the income and substitution effects of the minimum wage increase. Support your answer with a diagram, and with justification as to which particular effect dominates (either income or substitution).

Hint: think about the role of preferences for free time from this wage increase.

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