What impact would an increase in the minimum wage have on the quantity demanded and quantity supplied of labour?
A) It would increase both the quantity demanded and the quantity supplied of labour.
B) It would decrease both the quantity demanded and the quantity supplied of labour.
C) It would increase the quantity of labour demanded while decreasing the quantity supplied.
D) It would decrease the quantity of labour demanded while increasing the quantity supplied.

Question

Quizplus · Accepted Answer

If the minimum wage is increased, the cost of labor will increase for firms, leading to firms demanding less labor. However, because a higher wage attracts more workers, the quantity of labor supplied will increase. Therefore, the quantity of labor demanded will decrease while the quantity of labor supplied will increase, leading to an overall increase in the labor market surplus.

What Impact Would an Increase in the Minimum Wage Have