Supply and demand works for apples but not labor. Labor cannot be distributed well and it has to be delivered on a daily basis generally. Nor do we have labor market makers, making the market is a private negotiation between hiring manager and prospective. None of that allows supply and demand to scale properly, and your supply/demand curve does not apply.
It was about the effect of the minimum wage on employment and the wage. The basic supply and demand model was displayed with the following graph. It was drawn from the Principles of Economics (Economics 1) course that I taught at Stanford in the Fall of 2009, and will still be teaching at Stanford in the Fall of 2019 (and in online form this summer).
It is encouraging that more people are interested in economic models and their policy implications. But I cannot help but think that fewer people understand or believe the basic supply and demand model than 10 years ago. Yes, I know there are underlying assumptions, and these must be explained.
In fact, your supply and demand does not apply at all, for anything, with price on the Y axis. Price is not what is negotiated with goods, the key Y axis is the wait in line; supply and demand are equilibriated when neither the supplier nor the demander becomes congested, that is the actual mathematical definition, and you got it wrong in your text book. Likely, for the same reason, your Taylor rule cycles like crazy, along with unemployment:
Here, we see unemployment cycle like crazy, that is not supply and demand happening, that is most likely the result of some stupid inflation rule implemented badly causing cycles.
My advice to students, consult a mathematician before buying any of these bogus econ texts.
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