Is the deadweight loss associated with the minimum wage

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Suppose that the low-skill job market is perfectly competitive and that the equilibrium wage and monthly output in the market absent government interference are $4.50 per hour and 1,000,000 hours. Assume that the demand and supply elasticity equal one and two. If the federal government mandates a minimum wage of $7.25 per hour, explain what happens to producer, consumer, and total surplus. Is there deadweight loss associated with the minimum wage?

Reference no: EM13238557

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