Minimum wage is a government-imposed legality in the labor market, which means that employers are not allowed to pay employees below the government-mandated wage. This is what is happening to workers in Minionland, where the Minionion government announced that the minimum wage would be increased to $900 million per month due to the increasing cost of living in the country. The new wage rate represents an 18.8% increase that affects 128,500 low-skilled workers in Minionland. The diagram below shows the labor market supply and demand curve before the new $900 million minimum wage imposed by the government. Diagram 1Diagram 1 is produced based on the assumption that the minimum salary before the increase is $730.80 million based on an 18.8% increase in the new average salary and that the 128,500 low-skilled workers remain constant and in equilibrium. The equilibrium wage is marked as P0. The demand curve represents the businesses that employ the workers while the supply curve represents the labor force in Minionland. When the minimum wage is imposed by a servant government, it creates a surplus of low-skilled workers. A surplus of low-skilled workers occurs when the quantity of supply Qs1 is greater than the quantity of demand Qd1. This surplus of workers is also called unemployment. Furthermore, producer surplus is greater than consumer surplus. Producer surplus is the total profit made by employees from finding employment, while consumer surplus is the total profit made from hiring workers. Graphically, shaded area A represents consumer surplus which is less than producer surplus which is shaded area B. On the other hand, imposing a minimum wage creates a deadweight loss. The deadweight loss is a net loss for society due to the minimum wage. It is represented by a...... middle of paper ......reserves. This will lead to low worker productivity or, even worse, a union strike. This can be avoided through collective bargaining between the workers' union and the company. They will decide between themselves the amount of their remuneration based on the hours worked by the company. However, the bureaucracy between the union and the company can be very tedious. In conclusion, the best policy depends on several factors such as inflation, increasing cost of living, number of low and high skilled workers. Based on this situation, I prefer the minimum wage policy implemented by the servant country government. That's because they are right to raise the minimum wage, which increases the average cost of living. Even though they are sure that the effect on the unemployment rate will be slight, they will create a competitive job market for their citizens, which is a good thing from an economic point of view..