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Would Minimum Wage Shift the Supply Curve?
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lcyrg
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If minimum wage was increased, would the supply curve shift to a new equilibrium point?
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Luke7456
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Vallern
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(Original post by lcyrg)
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
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KevinLonge
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(Original post by lcyrg)
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
NOTE - If after the minimum wage increase, however, the minimum wage was actually less than what the firm was already paying to its workers (e.g. the minimum wage increased from £5 to £7, but firms were paying there workers £10 anyway), then there would be no effects on the firms' costs of production, as the minimum wage increase has effectively done nothing. In this scenario, the minimum wage increase would not lead to a shift of the supply curve.
If you were talking about the labour market, though, then the supply curve wouldn't exactly shift, but what you would get a diagram like the one below:
https://gyazo.com/9acf8a26ff462da1990f9b2f37ef6011
In the example above, I have basically shown the NMW (national minimum wage) increasing to the NLW (national living wage), which is effectively showing the same thing as the minimum wage rising. If this doesn't look familiar to you, I would assume that you must have just been talking about basic demand and supply in the product market, in which case, my original explanation earlier should suffice.If you have any question about what I said, feel free to ask.
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Vallern
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(Original post by KevinLonge)
Assuming you are talking about demand and supply in the product market, then yes, the supply curve would likely shift left due to an increase in costs of production.
NOTE - If after the minimum wage increase, however, the minimum wage was actually less than what the firm was already paying to its workers (e.g. the minimum wage increased from £5 to £7, but firms were paying there workers £10 anyway), then there would be no effects on the firms' costs of production, as the minimum wage increase has effectively done nothing. In this scenario, the minimum wage increase would not lead to a shift of the supply curve.
If you were talking about the labour market, though, then the supply curve wouldn't exactly shift, but what you would get a diagram like the one below:
https://gyazo.com/9acf8a26ff462da1990f9b2f37ef6011
I
In the example above, I have basically shown the NMW (national minimum wage) increasing to the NLW (national living wage), which is effectively showing the same thing as the minimum wage rising. If this doesn't look familiar to you, I would assume that you must have just been talking about basic demand and supply in the product market, in which case, my original explanation earlier should suffice.If you have any question about what I said, feel free to ask.
Assuming you are talking about demand and supply in the product market, then yes, the supply curve would likely shift left due to an increase in costs of production.
NOTE - If after the minimum wage increase, however, the minimum wage was actually less than what the firm was already paying to its workers (e.g. the minimum wage increased from £5 to £7, but firms were paying there workers £10 anyway), then there would be no effects on the firms' costs of production, as the minimum wage increase has effectively done nothing. In this scenario, the minimum wage increase would not lead to a shift of the supply curve.
If you were talking about the labour market, though, then the supply curve wouldn't exactly shift, but what you would get a diagram like the one below:
https://gyazo.com/9acf8a26ff462da1990f9b2f37ef6011
I
In the example above, I have basically shown the NMW (national minimum wage) increasing to the NLW (national living wage), which is effectively showing the same thing as the minimum wage rising. If this doesn't look familiar to you, I would assume that you must have just been talking about basic demand and supply in the product market, in which case, my original explanation earlier should suffice.If you have any question about what I said, feel free to ask.
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