If a firm has a perfectly inelastic labor demand curve, then a minimum wage will lead to _____ in the number of workers hired and _____ in the wage of workers.
A) an increase; no change
B) a decrease; no change
C) no change; no change
D) no change; an increase

Question

Quizplus · Accepted Answer

A perfectly inelastic labor demand curve means that the quantity of labor demanded by employers does not change regardless of the wage rate. Therefore, if a minimum wage is introduced or increased, it will not affect the number of workers hired (no change in employment) but will increase the wage of workers.

If a Firm Has a Perfectly Inelastic Labor Demand Curve