Multiple Choice
Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $7.25. The government's action of increasing the minimum wage will result in
A) a decrease in unemployment.
B) an increase in unemployment.
C) a shortage of low-skilled labor.
D) neither a shortage nor a surplus of labor in the low-skilled labor market.
Correct Answer:
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