The figure below shows labor supply and labor demand curves. -Refer to the figure above. John's reservation wage is w₁ and Joy's reservation wage is w₂. Assume that a minimum wage is implemented at w₁. John and Joy are both unemployed. What is true about John and Joy? A) Joy is voluntarily unemployed, and John is involuntarily unemployed. B) John is voluntarily unemployed, and Joy is involuntarily unemployed. C) John and Joy are both voluntarily unemployed. D) John and Joy are both involuntarily unemployed.

Question

Quizplus · Accepted Answer

Since the minimum wage is set at John's reservation wage and above Joy's, both are unable to find work at this wage level, making them involuntarily unemployed.

The Figure Below Shows Labor Supply and Labor Demand Curves