Consider the graph of the labor market shown below. If the government raises the minimum wage from $23 to $25:

A)the total number of people employed in this market will rise by 6,000 people.
B)the number of people working in this market will fall by 4,000 people.
C)2,000 people who want to work will be unemployed.
D)8,000 people who want to work will be unemployed.

Question

Consider the graph of the labor market shown below. If the government raises the minimum wage from $23 to $25:

A)the total number of people employed in this market will rise by 6,000 people. 
B)the number of people working in this market will fall by 4,000 people. 
C)2,000 people who want to work will be unemployed. 
D)8,000 people who want to work will be unemployed.

Quizplus · Accepted Answer

When the minimum wage is increased, employers will have to pay their workers more. This increases the cost of production and reduces the amount of profit employers can make. As a result, employers will hire fewer workers, and some may even lay off workers. This leads to a decrease in the number of people employed in the market. In this specific graph, if the minimum wage is increased from $23 to $25, the number of people employed will decrease by 4,000 from 12,000 to 8,000. Therefore, the correct answer is B.

Consider the Graph of the Labor Market Shown Below