# Would Minimum Wage Shift the Supply Curve?

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#1
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
0
3 years ago
#2
its called robots
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3 years ago
#3
(Original post by lcyrg)
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
The supply curve as a function would not change. However the equilibrium might change, depending on the original equilibrium. For example is the original wage equilibrium is higher than the new minimal wage, then the equilibrium will not change.
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3 years ago
#4
(Original post by lcyrg)
If minimum wage was increased, would the supply curve shift to a new equilibrium point?
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

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.
2
3 years ago
#5
(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.
I automatically assumed that he meant the supply curve in the labour market :P
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