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If labor demand is low, increasing the minimum pay of workers is likely to reduce the wages of employees earning less than the minimum wage (Meer & West, 2015). The employment rate can also lower the cost of labor, which may be too high for the company. Higher minimum pay will therefore result in a greater number of people wanting to work for a specific employer. A rise in labor supply would result in a decrease in labor demand in the organization, which would increase unemployment. An increase in labor demand may result from an increase in labor demand elasticity. The decrease in employment can arise when the elasticity is lower than demand (Meer & West, 2015).
Demand and supply involve the relationship between price and quantity of a given product (Ruttan & Thirtle, 2014). Equilibrium is created where the two intersect. The markets are likely to reach equilibrium if the price of a given item does not create shortage or surplus in the market. The new technology has led to the rise in a number of the fuel-efficient cars. This shows that the demand for gasoline would be relatively higher than before. However, the sellers need to put affordable prices of gasoline. The prices of goods are likely to affect their demand especially if the goods are not basic needs (Ruttan & Thirtle, 2014). The demand for gasoline is low when the prices are above equilibrium. Equilibrium of gasoline market would be only achieved if its supply and demand intersects.
Meer, J., & West, J. (2015). Effects of the minimum wage on employment dynamics. Journal of Human Resources.
Ruttan, V., & Thirtle, C. (2014). The role of demand and supply in the generation and diffusion of technical change (Vol. 21). Routledge.
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