Assume the minimum wage is increased above the previous equilibrium wage. Which of the following statements is/are correct? The supply curve of workers will increase. The demand curve for workers will decrease. The unemployment rate will decrease. The quantity of labor supplied will increase. The unemployment rate will increase.

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Business

Mariah Campbell

6 March, 18:15

Assume the minimum wage is increased above the previous equilibrium wage. Which of the following statements is/are correct? The supply curve of workers will increase. The demand curve for workers will decrease. The unemployment rate will decrease. The quantity of labor supplied will increase. The unemployment rate will increase.

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Answers (1)

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Garrett Elliott · Answer 1

The quantity of labor supplied will increase.

and

The demand curve for workers will decrease.

Explanation:

In the labour market, when the minimum wage is increased abov the equilibrium wage (quantity of labour supplied is equal to the quantity to labour demanded), the quantity of labor supplied by workers would exceed (not equal and be greater than) the quantity demanded by employers.

For example, if the minimum wage for workers in the Mining sector is increased from $10 daily to $25 daily. This increase in price may result in an increase in the supply of employees (miners) working in the mining sector.

As a result of this increase above the equilibrium wage, employers would reduce their demand for workers (demand curve for workers) in other to reduce their increased expenses.