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Price Floor Visualizer

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About This MicroSim

This MicroSim demonstrates how price floors work using a minimum wage example in the labor market. When the minimum wage is set above the equilibrium wage, a surplus of labor (unemployment) develops as more workers want jobs than employers are willing to hire. The simulation shows employed workers (green dots) and unemployed workers (red X marks), calculates the deadweight loss, and compares total wage income under the floor versus at equilibrium.

How to Use

  1. Adjust the "Set Min Wage" slider to set the minimum wage from $8 to $20 per hour.
  2. Observe the red dashed line representing the price floor. When it rises above the equilibrium wage of $12/hr, a "BINDING FLOOR" warning appears.
  3. Read the info panel on the right showing jobs available (labor demand), workers seeking work (labor supply), and the number of unemployed workers.
  4. Check "Show Winners & Losers" to see who benefits (workers who keep their jobs at higher wages) and who is harmed (workers who lose jobs or cannot find work).
  5. Check "Show Equilibrium" to display the gold equilibrium point for reference.
  6. Click "Remove Floor" to set the minimum wage at $8 (below equilibrium), making it non-binding.

Iframe Embed Code

You can add this MicroSim to any web page by adding this to your HTML:

<iframe src="https://dmccreary.github.io/economics-course/sims/price-floor-visualizer/main.html"
        height="542px"
        width="100%"
        scrolling="no"></iframe>

Lesson Plan

Grade Level

9-12 (High School Economics)

Duration

10-15 minutes

Prerequisites

  • Understanding of supply and demand and market equilibrium
  • Knowledge of the labor market (workers supply labor, employers demand labor)

Activities

  1. Exploration (5 min): Set the minimum wage to $8 and slowly increase it. At what wage does unemployment first appear? Record the unemployment at $13, $16, and $19. What pattern do you see?
  2. Guided Practice (5 min): Enable "Show Winners & Losers." At a minimum wage of $16, compare the total wage income (floor income) to the equilibrium income. Are total wages higher or lower? Discuss the trade-off between higher wages for some and unemployment for others.
  3. Assessment (5 min): A state is debating raising the minimum wage from $12 to $15. Using the simulation, calculate the number of workers who gain (higher wages), the number who lose (unemployment), and the change in total wage income. Write a recommendation.

Assessment

  • Students can explain why a price floor only affects the market when set above the equilibrium price
  • Students can calculate the surplus (unemployment) created by a binding minimum wage
  • Students can analyze the trade-offs between higher wages for some workers and reduced employment for others

References

  1. Price floor - Wikipedia - Overview of price floors including minimum wage as a common example.
  2. Minimum wage - Wikipedia - History, economic arguments, and empirical evidence on minimum wage policies.
  3. Minimum Wage and Price Floors - Khan Academy - Video lesson on how price floors create surpluses in labor markets.