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

Question

Quizplus · Accepted Answer

A perfectly inelastic demand curve means that the quantity demanded does not change regardless of the price. Therefore, if the minimum wage increases, the quantity of workers hired remains the same, but the wage of workers increases.

If a Firm Has a Perfectly Inelastic Labor Demand Curve