If an increase in the minimum wage above the equilibrium wage does not lead to any additional unemployment and increases the wage of workers, then we know that the _____ curve for labor is perfectly _____.
A) supply; elastic
B) supply; inelastic
C) demand; elastic
D) demand; inelastic

Question

Quizplus · Accepted Answer

The demand curve for labor must be perfectly inelastic in this scenario. This means that employers' demand for labor does not decrease even when the wage rate increases, which explains why there is no additional unemployment and wages for workers increase.

If an Increase in the Minimum Wage Above the Equilibrium