Figure 20-3
-Refer to Figure 20-3.If the government imposes a minimum wage above W_o,it is likely to

Question

Figure 20-3 -Refer to Figure 20-3.If the government imposes a minimum wage above W_o,it is likely to

Quizplus · Accepted Answer

If the government imposes a minimum wage above W_o, it will increase the cost of labor for firms, leading to a decline in demand for labor. As a result, the quantity of employment would decline to a level below Q_o. Thus, choice B is the correct answer. Choice A is incorrect because higher wage costs would lead to reduced employment, meaning that the employment level would not rise above Q_o. Choice C is also incorrect because although the minimum wage would provide higher income levels to those working, it would be offset by the decline in employment, meaning that the gain in income would be offset by the loss of employment for some workers. Finally, choice D is incorrect because the minimum wage would surely affect the level of employment.

Figure 20-3 -Refer to Figure 20-3.If the Government Imposes a Minimum Wage