Figure 20-1

-Refer to Figure 20-1.If the government imposes a minimum wage above Wo,which effect is it likely to have

Question

Figure 20-1
 
-Refer to Figure 20-1.If the government imposes a minimum wage above Wo,which effect is it likely to have

Quizplus · Accepted Answer

Imposing a minimum wage above Wo will increase the wage rate to Wmin, which is above the market equilibrium wage rate Wo. This will increase the cost of hiring workers, and hence reduce employment to a level below Q₀. Therefore, option B is the correct choice. Option A is incorrect because the increase in the wage rate will discourage employers from hiring more workers. Option C is irrelevant to the question as it does not focus on the effect on employment. Option D is incorrect as the imposition of a minimum wage will shift the supply curve to the left, causing the market equilibrium wage rate to increase from Wo to Wmin.

Figure 20-1 -Refer to Figure 20-1.If the Government Imposes a Minimum Wage