Rupert is a low-skilled worker who washes dishes in a local restaurant.A proposal to increase the minimum wage may worry him if he knows that price

Question

Quizplus · Accepted Answer

When the minimum wage is increased above the equilibrium wage, which is the wage rate that balances the demand for and supply of labor, it leads to an increase in the cost of labor for employers. This cost is likely to be passed on to consumers in the form of higher prices for goods and services. As a result, the demand for those goods and services may decrease, leading to a surplus of low-skilled workers such as Rupert. This is because employers may seek to reduce their costs of production by substituting low-skilled workers with higher-skilled ones, increasing automation, or outsourcing jobs to other countries. Therefore, the proposal to increase the minimum wage may worry Rupert as he may find it harder to secure and keep a job due to a potential surplus of low-skilled workers.

Rupert Is a Low-Skilled Worker Who Washes Dishes in a Local