Suppose a minimum wage of $15 an hour is in force,resulting in unemployment of 10 million hours.Then the demand for labour increases such that supply and demand curves intersect at a wage rate of $17 per hour.What will happen to the equilibrium wage rate and employment?
A)The wage rate is $17 an hour and there will be no unemployment.
B)The wage rate is $17 an hour and there will be a surplus of labour.
C)The wage rate is $15 an hour and there will be a surplus of labour.
D)The wage rate is $15 an hour and there will be no unemployment.
E)The wage rate is $15 an hour and there will be unemployment.

Question

Quizplus · Accepted Answer

When the supply and demand curves intersect at a wage rate of $17 per hour, that becomes the new equilibrium wage rate. Since the demand for labour has increased, there will be no unemployment at this new equilibrium wage rate. Therefore, the wage rate is $17 an hour and there will be no unemployment.

Suppose a Minimum Wage of $15 an Hour Is in Force,resulting