Minimum Wage

The following diagram shows the effects of the impostition of a minimum wage under conditions of labour market monopsony. Before the imposition of the minimum wage, the wage is determined by

the average cost of labour at that level of employment where the marginal revenue product equals the marginal cost of labour
the average cost of labour at that level of employment where the demand curve equals the marginal revenue product
the average cost of labour at that level of employment where the demand curve intersects the average cost of labour
the marginal cost of labour at the level of employment given by n*

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