In a labor market characterized by a downward-sloping demand curve and an upward-rising supply curve,the disemployment effect of a minimum wage does not equal the total unemployment caused by the minimum wage.Which of the following can explain this difference?
A)The demand for unskilled labor increases with an increase in the wage rate
B)At a higher wage,more people may enter the job market
C)The demand for skilled labor increases with an increase in the wage rate
D)At a higher wage,the supply of labor becomes inelastic

Question

Quizplus · Accepted Answer

When the minimum wage is increased, more people may be willing to enter the job market, which increases the labor supply. However, this increase in supply does not necessarily lead to a proportional increase in unemployment, as some of these new workers may find jobs due to the higher demand for labor resulting from increased consumer spending. Therefore, the disemployment effect of a minimum wage does not equal the total unemployment caused by the minimum wage.

In a Labor Market Characterized by a Downward-Sloping Demand Curve