The economic order model of inventory management

Question 1: Please answer this question strictly from a pure economics point of view only. Let’s pretend that you are the employer/owner of a firm located in an area with a higher minimum wage in this shopping mall. The product you are selling is hamburger and let’s assume that the hamburger from Carl’s Junior, Wendy’s, and Burger King are exactly the same. As you know, not all workers have the same level of skills and/or productivity. Given that you now have to pay a higher minimum wage, who would you likely keep employed in your firm (would you pick the most productive or the least productive worker)? Why?

Question 2: Use the economic model on price floor and strictly from this model please explain which one would be greater. Will quantity supplied be greater than quantity demanded? Or will quantity demanded be greater than quantity supplied? Why?

****Remember, demand and quantity demanded are two different things just like how supply and quantity supplied.*****

Question 3: Firms need to earn a profit and due to this some firms may do what with the price of their products they sell to their customers after the minimum wage was instituted? Will the firms charge a higher or lower price to their customers? Why?

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