A case study in this chapter discusses the federal minimum-wage law.

Suppose the minimum wage is $8 per hour in the market for unskilled labor, as shown on the

following graph.

Use the grey point (star symbol) to indicate the market equilibrium wage and quantity of labor in

the absence of a minimum wage. Then use the purple point (diamond symbol) to indicate the

level of employment at the minimum wage provided, and use the orange point (square symbol)

to indicate the quantity of labor supplied at this minimum wage. Finally

pur-new-sol

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