Question:

What would the deadweight loss be in the event that the minimum wage is raised to $12 an hour?

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Seeking a better understanding in regards to the deadweight loss that results from a "very high" minimum wage (such as $12/hour).

Thanks for your help!

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1 ANSWERS


  1. increasing the minimum wage is something like putting a price floor above equilibrium price.   A firm will hire fewer people causing a surplus of jobs. (increase in unemployment).   The dwl will be the triangle where original equilibrium is and the new one.  Youtube video explains more:

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