when the minimum wage rises from 8 to 11 in the fast food in

when the minimum wage rises from $8 to $11 in the fast food industry the government implements a price floor on the minimum wage at $11. what impacts would this have on the unemployment rate for fast food workers? would be surplus or shortage of fast food workers at the minimum wage price floor of $11? why explain

Solution

Because the new price floor is increased from 8 to 11, the minimum wage legislation is likely to bring more unemployment among fast food workers. This is because when a minimum wage is increased, it increases labor quantity supplied but reduces labor quantity demanded. Hence the unemployment of rate for fast food workers will increase as there is now a large pool of surplus fast food workers who are not demanded by restaurants.