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Supply Cost Changes & Effects on Equilibrium Price & Quantity

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The minimum wage is raised in your area, and you must pay your employees more.

Will the equilibrium price rise or fall AND will the equilibrium quantity to rise or fall. Also which curve is shifting and which shifter variable is affected.

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Solution Summary

This answer assist looks at the effects of changes in supply costs and supply curve shifts on equilibrium price and quantity.

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When the minimum wage increases, supply costs increase at every level of quantity supplied. This causes a leftward shift in the supply curve. Notice that I always speak of movements of increase or decrease as rightward or leftward shifts. Always think of ...

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