Consider a labor market where the demand for labor is downward-sloping but the supply of labor is perfectly inelastic.Which of the following will hold true in this market when a minimum wage is imposed by the government?
A) The disemployment effect will surpass the total unemployment caused by the minimum wage.
B) The total unemployment will surpass the disemployment effect caused by the minimum wage.
C) The minimum wage will not decrease the total labor employment.
D) The disemployment effect will be equal to the total unemployment caused by the minimum wage.
Correct Answer:
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