Newspaper article that is relevant to the economics concepts - Essay Example

Download file to see previous pages... Together with other legislators they want this figure to rise to $10.10 per hour. It is argued by other economists that this will interfere with the market since the new wages will not be in line with the market demand and supply forces that are outlined in the diagram below (Jekin, 2001).
According to this diagram, the supply and demand of commodities have a direct impact on the price of the commodity. In this case, the goods in question will be the labor. In regards to the law of demand, when there is an increased supply of a commodity the demand for the product is expected to drop. The demand for products is highest when the supply of a given product is quite low. In this situation, people are willing to pay an extra amount so as to get the product since it is not readily available. Therefore the low rates of minimum wage can be attributed to the fact that there are many laborers who are ready and willing to work at that wage and therefore the industries should be left to decide the minimum wage (Gale, 2009).
However, when the president increases the minimum wage, there will be two effects. One of which is that industries will not be able to pay people the expected amount and therefore will have to lay off workers. On the other hand, the increase in the minimum wage is likely to attract more people to these jobs. Both of these instances will result to an increase in the supply of labor. According to the law of supply, when the supply is high, the demand is low and this pushes the price of the service much lower so as to increase uptake. However, when the demand and the supply curves cross is where there is an equilibrium point (Jekin, 2001).
As illustrated in the diagram above, an increase in the minimum wage is likely to result in a shift in the labor supply curve. A shift in the labor curve results to an increase in workers in the market. This increase in the amount of laborers will lead to a decrease in the ...Download file to see next pagesRead More