Ermmm...
There is no $1 equilibrium price considered too low. I already
told you $1 is the equilibrium price (market clearing) of
Apples, but to be effective you said it needs to be set at $2.
Equilibrium price means the market clears at that rate. Still
can consider too low?
You are just regurgitating out textbook knowledge.
When the current equilibrium rate is too low, say $0.50 when the
market clearing is $1, by setting it to $0.95, though we are not
above the equilibrium rate. But then demand still outpace supply.
But your understanding is setting it to $2 would be effective.
Effective deadweight loss?
The issue is.
What is the equilibrium rate?
If the equilibrium rate is $1, employers are currently paying
$0.50, then you are still below the equilibrium rate and setting it
at $0.95 is still below the equlibrium rate. Your understanding or
misunderstanding is that $0.50 is the equilibrium rate, but the
fact is, we both don't know what is the equilibrium rate.
Unless you can give me the calculation for the equilibrium wage
in Singapore.
The equilibrium wage or market clearing wage is DD for Labour =
SS of Labour.
Demand for labour by the firms will depend on the firms'
assessments of the contribution of the labour and the wages that
the firms are willing to pay the workers and how many workers to
employ.
The issue is that workers believe that firms PURPOSELY pay low
wage for the workers despite the contribution of the labour for the
production ie workers believe that firms are not paying them fair
wage ie firms did not pay the workers the wage that can at least
cover their cost of living.
While the firms INSIST that they have paid the workers according
to the value of work contributed by the workers.
Supply of Labour by the workers will depend on the willingness
and ability of the workers for the wages offered.
The issue is that cheap foreign workers are allowed to enter
Singapore and hence there is a huge supply of cheap labour while
local Singaporeans are not willing to work at this low wage as the
low wage cannot cover their living expenses.
So, is there an equilibrium wage ?
Yes, there are firms who want to employ workers and there are
workers who want to work at the market wage ie the equilibrium wage
where DD for Labour = SS of Labour.
The issue here is that this equilibrium wage is considered too
low by those Singaporeans who are not willing to work as the this
low equilibrium wage cannot cover their living expenses AND also
the biased views of the employers who only want to employ cheap and
young foreign workers.
So, the issue here is that how to enable local Singaporeans to
earn at least a wage that can cover their living expenses and yet
the wage that will not lead to firms to cut down on workers or
re-locate to other cheaper countries ?
