In the summer of 2009, the United States federal minimum wage was raised to $7.25. According to theory, what will likely be the result of an increase in minimum wage?

A. All workers prior to the wage increase will now earn at least the minimum wage.
B. Some workers will leave the labor market.
C. Unemployment will increase as firms lay off workers.
D. Firms will hire more workers.


Answer: C

Economics

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