What are your thoughts about minimum wage legislation? What kind of a price-control policy is this? Who gains? Who loses? Are there alternatives to this legislation for achieving the same policy objectives? What role do demand and supply elasticities play in determining outcomes?
The purpose of minimum wage legislation is to make sure employers will not under pay its workers and ensure that workers are paid fairly I think it is good for the employees, however it can be a detriment as employers cannot afford to pay the minimum wage so they must hire less employees in order to satisfy the minimum wage requirement. Especially in today’s economy workers would accept jobs at rates below min wage, however employers cannot. The government sets these price floors and it can have two effects minimum-wage laws can create unemployment among unskilled workers, but minimum wages does raise the income of poor workers who remain employed in regulated markets. The price elasticity of demand measures the sensitivity of the quantity demanded to price.
The price elasticity of demand is the percentage change in quantity demanded brought by a 1 percent change in price. The value of price elasticity of demand for a normal good must always be negative, reflecting the fact that demand curves slope downward because of the inverse relationship of price and quantity. The price elasticity of supply measures the sensitivity of quantity supplied to price. The price elasticity of supply tells us the percentage change in quantity supplied for each percent change in price. The value of price elasticity of supply for a normal good must always be positive, reflecting the fact that supply curves slope upward because of the positive relationship of price and quantity.