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What They Never Told You About E.
Transcript of What They Never Told You About E.
happens when have e.g. minimum wage laws Desirable theoretical equilibrium! The maximum amount of people can work for the market wage Let the market do it's thing! I'm sure we're all taught that the market automatically adjusts and gives us an optimal output The Invisible Hand! But does it really work?
How does it work? Maybe...it goes like this We take away the price floor (minimum wage) People earn less...booh... They buy less too... Companies earn less... They have to fire more people GASP! That means even less employment than before, and probably at an even lower wage! So in the end...does it
always work out as
we predict with our
normal models? probably not!
we really can't have
that cover every scenario
every case is unique Equilibrium?