Minimum Wage in Greece

Newsday's article, "Greek Parliament Backs New Pension Reforms" illustrates some topics present in microeconomics. Greece has been struggling economically being in debt for roughly five years of late. Greece has been attempting to reform their economy to fix this issue. Many of their newest reform ideas are listed in this recent article. One of these reforms is to lower minimum wage.

From an economic standpoint this decrease in minimum wage will help the labor market. Minimum wage is designed to improve the well-being of the employed population, but it increases the amount of unemployment because it acts as a price floor that creates deadweight loss. An increase in minimum wage creates a decrease in demand for labor thereby decreasing the supply of employed workers in the labor market. This decrease in minimum wage will decrease the well-being of the employed population, but it will also create more jobs. With Greece's massive unemployment rate, this new reform will most likely be beneficial to the population because it will most likely help more people in need of jobs than it will hurt those who already have existing jobs.

Tariffs Fixed to Increase Trade

In Newsday's article, "European-Moroccan pact loosens fish, food trade" the subject of tariffs is discussed. The European Parliament approved a new deal to boost Mediterranean trade by reducing customs costs. A ten year plan was put into motion that hopes to increase Moroccan trade and EU exports substantially. People in favor of this pact find it a good way to keep relations strong between the EU and Morocco as well as help international trade. People against this pact say it will hurt local industries. Many local food industries from these parties do not export because they are small family run businesses. This pact will hurt these groups because only the big food conglomerates are profiting from the deal. Morocco claims to have accepted this agreement with open arms, but the article seems to suggest that they were pressured because if this pact wasn't agreed upon, the entire relationship between these two entities would be reevaluated. 40% of the farms in Morocco are small family farms while the wealthy families with larger farms are benefitting from this agreement. Only time will tell whether or not this agreement is beneficial to both parties involved.

This article is a good example of how tariffs can effect trade. The pact is designed to increase exports and lower costs to do so. This shows how international trade increases producer surplus and how decreased tariffs decrease deadweight loss. This article also shows that there has to be a loser in these situations. No economic scenario is a win-win. The loser in this case would be the local producers that don't export and may go out of business because of it. All in all, this trade deal is a great example of how international trade applies to microeconomics.