Answer :
Congress passes a law that requires employers to provide health benefits to workers. Suppose this law results in a $3 per hour increase in the cost of hiring workers. The law is likely to decrease the demand for labor and decrease the equilibrium wage paid to workers.
A change in wage or salary will result in a change in the quantity of work requested. Employers will want to recruit fewer people if the pay rate rises. The quantity of labor demanded will decrease.
Labor markets, like goods markets, have demand and supply curves. In labor markets, the law of demand works as follows: A greater pay or compensation—that is, a higher labor market price—decreases the quantity of labor required by employers, whereas a lower salary or rate increases the quantity of work demanded. The law of supply also applies to labor markets: A higher labor price results in a greater quantity of labor supplied; a lower price results in a lesser quantity supplied.
The minimum wage, on the other hand, is a unique instance in the labor market since demand for many of these workers is inelastic.
Governments frequently set a minimum wage in order to boost the earnings of low-paid workers. Because it is placed above the market pay, a minimum wage is very similar to a floor price.
The equilibrium market wage rate is found at the point where supply and demand for labor coincide. Employees are employed until the additional cost of recruiting an employee equals the additional sales income from selling their output.
At equilibrium, the quantity supplied and the quantity demanded are equal. For example, Every business that wants to recruit a nurse at this equilibrium wage can find a willing candidate, and every nurse who wants to work at this equilibrium wage can find a decent job.
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