Question

Are wages different than other types of prices? Does the law of demand apply to the labor market for minimum wage jobs?

Answer 1

No, wages are similar to other types of price. Like other prices it is also dependent on the demand and supply forces. When the demand for Labour is high then the wage would be high and vice versa. When the supply is high then the supply curve will shift to its right therefore the wage would tend to be low.

The law of demand applies in the Labour market too. That is a higher wage will lead to a decrease in quantity Labour demanded by employer, while a lower wage will lead to an increase in quantity of labour demanded by employer.

When a minimum wage is imposed then the wage would be higher then the equilibrium wage. Thus, the employer would have to pay higher than the equilibrium wage therefore, employers would demand less of labour.  

We can conclude that law of demand is applicable in labour market.

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