An increase in the minimum wage:

a. increases both the quantity demanded and the quantity supplied of labor.

b. decreases both the quantity demanded and the quantity supplied of labor.

c. increases the quantity of labor demanded but decreases the quantity of labor supplied.

d. decreases the quantity of labor demanded but increases the quantity of labor supplied.

Question

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Averie

11 April, 00:48

An increase in the minimum wage:

a. increases both the quantity demanded and the quantity supplied of labor.

b. decreases both the quantity demanded and the quantity supplied of labor.

c. increases the quantity of labor demanded but decreases the quantity of labor supplied.

d. decreases the quantity of labor demanded but increases the quantity of labor supplied.

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Answers (1)

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Leonidas Webb · Answer 1

An increase in the minimum wage:

d. decreases the quantity of labor demanded but increases the quantity of labor supplied.

Explanation:

An increase in the minimum wage impact negativly in the demand of labor because each hour it's now more expensive than before, it means that company will looks to reduce their number of headcont due to an increase in each hour of labor existing, all of these just to keep the company cost at the same level.

The increase in the quantity of labor supplied it's favorable because a lot of people will be motivated to look for a job because the company will have to pay better salaries than before, on this escenario more people will go to the market labor looking for a job.

This increase in the labor supply is for those who were not willing to work under the previous salary conditions.