Question

An effective minimum wage policy in a competitive market will increase unemployment and increase the total earnings of labor only if the demand for labor is (A) relatively inelastic (B) relatively elastic (C) unit elastic (D) greater than the supply (E) positively related to the wage rate

Answer 1

Answer:

D

Explanation:

greater than the supply

Answer 2

A minimum wage policy in a competitive market will increase unemployment and increase the total earnings of laborers only if the demand for labor is greater than the supply.

What are the consequences of an effective minimum wage?

Low wages reduce entry-level jobs, training, and lifelong income. Policymakers often raise the minimum wage as a way to increase income and lift workers out of poverty.

However, the improvement in the salaries of some new employees can cost the workers who receive low wages.

Thus, Option D is the correct statement.

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