Why do some workers lose their job when the minimum wage is increased?
A) The increase in labor costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero.
B) The increase in the minimum wage decreases the quantity of labor demanded.
C) The demand for labor is perfectly inelastic.
D) The supply of labor decreases.
E) The demand for labor is perfectly elastic.
B
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Deficit spending will not cause much inflation if the economy is operating near full employment
a. True b. False Indicate whether the statement is true or false
In an economy, the government wants to decrease aggregate demand by $48 billion at each price level to decrease real GDP and control demand-pull inflation. If the MPS is 0.25, then it could:
A. Increase taxes by $16 billion B. Increase taxes by $24 billion C. Decrease government spending by $10 billion D. Decrease government spending by $16 billion