Which of the following statements is true?
A) A minimum wage causes an increase in employment.
B) A minimum wage reduces the demand for labor.
C) A minimum wage reduces the quantity demanded of labor.
D) A minimum wage increases the quantity of labor demanded.

Question

Quizplus · Accepted Answer

According to the law of demand, an increase in price (in this case, the minimum wage) will lead to a decrease in the quantity demanded. Therefore, a minimum wage will reduce the quantity demanded of labor. Option A is incorrect because an increase in the minimum wage can cause employers to reduce their workforce or hire fewer workers. Option B is incorrect; although some employers may reduce their demand for labor due to the increased cost of labor, others may adjust prices or take other measures to maintain their level of demand. Option D is incorrect because an increase in the minimum wage would lead to higher labor costs, which would make employers less willing to hire additional workers.

Which of the Following Statements Is True