Answer to Question #95580 in Microeconomics for Philtricia Mayindi

Question #95580
With the aid of a diagram, discuss the welfare effects of such a policy if the wage rate set is above the market clearing wage rate (assuming this is R12 per hour).
1
Expert's answer
2019-10-01T12:30:53-0400

Welfare is a sum of surpluses(consumers and produsers).

So, we can see on a diagram, that setting higher minimum wage that equilibrium will cause decrease in welfare.

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