The government of a large U.S. city recently established a \'Living wage law\" t

Question

The government of a large U.S. city recently established a 'Living wage law" that, beginning january 1 of the next year, will require all business operating within city limits to pay their workers a wage no lower than $8.50 per hour. The current equilibrium wage for fast-food workers is 7.50 per hour in this city. perdict what will happen to each of the following beginning on January 1 of next year:
a. The quantity of labor supplied by fast-food workers
b.The quantity of labor demanded by fast-food producers
c. The number of unemployed fast-food workers in this city

Explanation / Answer

if we consider the usual employees working hours 8 per day, the earning will be raised by $ 8 per day from $ 7.5 * 8 = $60 so, (a) the pay becoming attractive will obviously attracts more labor towards working in fastfood centres (or) the quantity of labor supply increases. (b) naturally, when the producer is put to pay more for the same employee, his intention to take another laborer into the centre will be lessened. consequently, the quantity of labor demand reduces. (c) as the pay becoming attractive, putting the conditions (a) and (b) together, we see that the number of unemployed fast food workers increases in the city.

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