Name: Instructor: Course: Date: Effects of price floors on minimum wages on employment and the production possibility curve A price floor is a legal minimum price set by the government for a particular good or a service. It is a way of controlling the price of above market equilibrium as less people are employed leading to low production. Setting a price floor on wages is more likely to affect the economy of a country negatively than positively. Work Cited Gans Joshua Stephen King and N. Gregory Mankiw. Principles of microeconomics. Cengage Learning 2011. [...]
Assume that the government imposes a price floor on minimum wages. How does it affect unemployment? How does it influence the production possibilities curve?