What happens to the quantity of labor supplied, the quantity of labor demanded, and the number of unemployed workers if the minimum wage rate set above the equilibrium wage is increased still higher?
What will be an ideal response?
An increase in the minimum wage increases the quantity of labor supplied because more people are willing to work at the higher wage rate. It decreases the quantity of labor demanded because firms hire fewer workers since the cost of the workers (their wage rate) has increased. The increase in the quantity supplied combined with the decrease in quantity demanded leads to an increase in the number of unemployed workers.
You might also like to view...
An increase in the money wage rate shifts the short-run aggregate supply curve ________; an increase in technology shifts the long-run aggregate supply curve ________
A) rightward; rightward B) rightward; leftward C) leftward; rightward D) leftward; leftward
An incumbent's gain from"learning by doing" is diminished if learning is slow because
A) the incumbent get too quickly a head start B) future entrants cannot catch up C) the incumbent will not bother to learn cost-saving techniques D) the early cost reduction enjoyed by the incumbent is very small
If a firm facing a linear demand curve experiences an increase in total revenue after lowering the price:
A. the initial price was set at a point where the demand is inelastic. B. the initial price was set at a point where the demand is elastic. C. the new price is set where the demand is perfectly elastic. D. the new price is set where the demand is perfectly inelastic.
You use $40,000 of your own money to start a catering business. During the first year you earn a 5% return on that investment. If the current interest rate on savings is 8%, you earn an economic profit of
A. -$1,200. B. $1,200. C. $2,000. D. $3,200.