Figure 9-1
This figure shows the effect of a minimum-wage law.
-Refer to Figure 9-1. If there was no minimum wage and then the government instituted a minimum wage of $6, what would happen to employment in this market?
A) Employment would rise by 10.
B) Employment would fall by 20.
C) Unemployment would increase by 10.
D) Unemployment would increase by 20.

Question

Figure 9-1
This figure shows the effect of a minimum-wage law. 
-Refer to Figure 9-1. If there was no minimum wage and then the government instituted a minimum wage of $6, what would happen to employment in this market?
A) Employment would rise by 10. 
B) Employment would fall by 20. 
C) Unemployment would increase by 10. 
D) Unemployment would increase by 20.

Quizplus · Accepted Answer

The figure shows that without a minimum wage, employment is at 100. With a minimum wage of $6, the equilibrium wage increases to $6 and the quantity demanded of labor decreases to 80. As a result, 20 workers become unemployed, leading to an increase in unemployment by 20.

Figure 9-1 This Figure Shows the Effect of a Minimum-Wage Law