Explain the relationship between price and income, and the effects of a higher minimum wage on employment and production costs.

QUESTION 9
The government department that deals with labour-related issues is typically the Department of Labour (or Ministry of Labour/Employment, depending on the country).

QUESTION 10
The relationship between price and income is generally inverse when considering real income or purchasing power. When prices for goods and services increase, the purchasing power of a given nominal income decreases, meaning that the same income can buy fewer goods and services. Conversely, if prices decrease, real income and purchasing power increase.

PART C: EXTENDED RESPONSE

a. Label the letters in the graph correctly.

• i. Quantity of labor supplied
• ii. Quantity of labor demanded
• iii. Unemployment (or Surplus of labor)

b. What is the overall negative consequence (effect) of setting a higher minimum wage on
i. employment?
A higher minimum wage can lead to a decrease in employment as businesses may reduce the number of workers they hire or lay off existing workers to offset the increased labor costs.
ii. cost of production?
A higher minimum wage increases the cost of production for businesses, as they have to pay more for their labor input.