Microeconomics Essay Example | Topics and Well Written Essays - 500 words - 2

Microeconomics - Essay Example This essay discusses free market, and how the price serves in it as the rationing mechanism. Pricing strategies and effects are also explained, as well as sellers and the way they can sell all they want at the equilibrium price. Two outcomes are probable when the government entails a price floor: if the price floor is lower than the equilibrium price, it is not binding and has no effect on the price or quantity sold, and if the price floor is higher than the equilibrium price, the floor is a binding constraint and a surplus is formed. The quantity supplied surpasses the quantity demanded. In this essay author refers to how buyers’ demands for the good or service must in several ways be rationed among sellers. This essay explaines such a thing using a significant example of a price floor, that is the minimum wage. Minimum wage laws order the lowest price for labor that any employer may pay. The economy nowadays includes not a single labor market, but many labor markets for various types of workers. The impact of the minimum wage was explained as well as workers and their skills and experience that were needed. The Advocates and the Opponents of the minimum wage give their opinion on the topic. While the Advocates consider the procedure as one way to increase the income of the working poor, the Opponents consider that high minimum wage triggers unemployment, encourages teenagers to drop out of school, and prevent several unskilled workers from getting the on-the-job training they need.