CAS EC 101 Lecture Notes - Lecture 12: Fair Labor Standards Act, Price Floor, Ice Cream
1 Oct 2018
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Some sellers are unable to sell what they want. Example: equilibrium price of ice cream = . Price floor of - binding, need to increase price. Minimum wage policies - lowest price for labor that an employer must pay an example of price floor. To ensure workers maintain a minimally adequate standard of living. Different states can go higher than it by their discretion. France has a minimum wage of 9. 4 euros () with an average income 27% lower than the u. s. If minimum wage is above the equilibrium, it results in. Higher income for worker who have jobs lower income for worker who can"t find jobs. To prevent job loss, you need a perfectly inelastic labor demand (happens in the short run) Employers will try to keep cost down to maximize profit. The labor demand will become more elastic -> greater job loss. Example: workers in a farm from short run to long run.
