A minimum wage increases unemployment by
A) increasing the quantity of labor demanded.
B) decreasing the quantity of labor demanded.
C) shifting only the labor supply curve rightward.
D) shifting only the labor demand curve leftward.
E) shifting the labor supply curve rightward and shifting the labor demand curve leftward.

Question

Quizplus · Accepted Answer

According to the law of demand, as the price of a good or service increases, the quantity demanded of that good or service decreases. In the case of labor, the wage rate is the price of labor. Therefore, as the minimum wage increases, employers are less willing and less able to hire as many workers, leading to a decreased quantity of labor demanded and hence higher unemployment rates.

A Minimum Wage Increases Unemployment by