Problem
You work for a governmental committee that focuses on unemployment. There is a policy to potentially raise the minimum wage from $7.25 to $12.00. Your job is to explain and illustrate the potential economic welfare effects of this. Illustrate a competitive market for labor with quantity of labor on the x-axis and the wage rate on the y-axis. The supply of labor is workers and the demand for labor comes from firms. In your explanation, explain the predicted effects on employment, consumer surplus, producer surplus, and total surplus. Support your answer with a graph.