The following graph illustrates a low wage labor market.
Imposition of the $12/hour minimum wage caused worker surplus to ____ and employer surplus to _____.

Question

The following graph illustrates a low wage labor market. 
Imposition of the $12/hour minimum wage caused worker surplus to ____ and employer surplus to _____.

Quizplus · Accepted Answer

As the minimum wage is imposed, the wage level shifts from W1 to W2, resulting in an increase in the wage rate and a decrease in the quantity of labor demanded. This leads to a surplus of workers, as more people are willing to work at the higher wage, but fewer jobs are available. This surplus leads to an increase in the worker surplus. On the other hand, the decrease in the quantity of labor demanded reduces the quantity of output, which decreases the employer surplus. Therefore, the imposition of the minimum wage causes worker surplus to rise and employer surplus to fall.

The Following Graph Illustrates a Low Wage Labor Market