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Normal demand curve and supply curve will make an equilibrium price and an equilibrium quantity.
Suppose the minimum wage (W) (the price floor) set below the market equilibrium price (P) (ie wages), (W < P) the minimum wage will have no effect and the wages will automatically increase to the equilibrium price (W = P). It is because the market mechanism will automatically adjust.
所以一個有意義的price floor, 一定會比equilibrium price為高 :
So the minimum wage must be set above the market equilibrium price (W > P). Under this situation, the excess supply of labour will occur. That is the quantity supplied (QS) greater than the quantity demanded (QD). It cannot be solved because government impose this minimum wage law. At last, only QD number of people will have employment, and the excess of supply of labour will be unemployed.