Figure 4-16
Refer to Figure 4-16. Some policymakers have argued that the government should establish a "living wage." A living wage would provide workers a reasonable standard of living in their city or region. If a living wage of $10 per hour is established in the market pictured here, we would expect
A) employment will increase to 14 million.
B) employment will decrease to 8 million.
C) the wage will actually rise to $20 per hour.
D) there will be a surplus of 14 million workers.

Question

Figure 4-16 
Refer to Figure 4-16. Some policymakers have argued that the government should establish a "living wage." A living wage would provide workers a reasonable standard of living in their city or region. If a living wage of $10 per hour is established in the market pictured here, we would expect
A) employment will increase to 14 million. 
B) employment will decrease to 8 million. 
C) the wage will actually rise to $20 per hour. 
D) there will be a surplus of 14 million workers.

Quizplus · Accepted Answer

If a living wage of $10 per hour is established in the market, employers will have to pay their workers at least $10 per hour. As a result, some employers may not be able to afford to hire as many workers and may choose to lay off workers. This will cause a decrease in employment in the market. Based on the graph, if the wage rate increases from $8 to $10 per hour, employment decreases from 12 million to 8 million workers. Therefore, the best answer is B.

Figure 4-16 Refer to Figure 4-16. Some Policymakers Have Argued That the Argued