A reduction in the minimum wage will tend to cause which of the following?

Question

Quizplus · Accepted Answer

A reduction in the minimum wage will lower the cost of hiring workers, which will increase the quantity of labor demanded by firms. This increase in labor demand will cause an upward movement along the labor demand curve, resulting in a downward shift in the WS (wage-supply) curve. This is because, at a lower wage rate, more workers are willing to work, and firms are willing to hire more workers. Therefore, reducing the minimum wage will not cause an upward shift in the PS (wage-demand) curve since there will be a surplus of workers, and the wages will decrease as a result of competition.

A Reduction in the Minimum Wage Will Tend to Cause