If a labor market is dominated by a monopolist, it is possible that the imposition of a minimum wage law could increase the amount of employment in that market.

Question

Quizplus · Accepted Answer

If the monopolist is keeping wages artificially low in order to maximize profits, a minimum wage law could force them to hire more workers at higher wages, resulting in an increase in employment. However, this is only true if the increase in wages does not cause the monopolist to reduce employment in order to maintain their profit margins.

If a Labor Market Is Dominated by a Monopolist, It