Create a 8 pages page paper that discusses microeconomics (ec2021c). This paper focuses on the costs of a rise in minimum wage, the benefits of a rise in minimum wage and finally the effect of a rise

Create a 8 pages page paper that discusses microeconomics (ec2021c). This paper focuses on the costs of a rise in minimum wage, the benefits of a rise in minimum wage and finally the effect of a rise in the minimum wage when the labor market is monopsonistic. The paper discusses the effect of this rise on the supply and demand curve on labor, effect on price, effect on the standard of living and how this increase will lead to unemployment and increased outsourcing in other lower minimum wage countries.

We first analyze the effect of an increase in minimum wage rates on the supply and the demand for labor in a competitive market, in a competitive market demand increases when wages decline and demand declines when wage rates increase. Supply of labor increases when the wage rates rise, and that supply of labor decline when wage rates are reduced, therefore an increase in minimum wage rates will increase supply and reduce demand.

From the above chart an increase in the minimum wage will lead to an increase in the supply of labor, the rationale behind this increase is because as minimum wage increase then more workers will be willing and also encouraged to work more labor hours and therefore supply of labor will increase.