FIGURE 14-5
-Refer to Figure 14-5.If this labour market is perfectly competitive,an increase in the legislated minimum wage from W₂ to W₃would

Question

FIGURE 14-5 -Refer to Figure 14-5.If this labour market is perfectly competitive,an increase in the legislated minimum wage from W₂ to W₃would

Quizplus · Accepted Answer

An increase in the legislated minimum wage from W₂ to W₃ would create a situation where the wage rate is above the equilibrium wage rate. This would create a surplus of labour, and thus create unemployment where there previously was none. Therefore, the best choice is B.

FIGURE 14-5 -Refer to Figure 14-5.If This Labour Market Is Perfectly Competitive,an