Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.
A) lower; lower
B) higher; higher
C) unchanged; unchanged
D) lower; higher
E) higher; lower

Question

Quizplus · Accepted Answer

In a market with elastic supply, a minimum wage leads to higher unemployment as workers are more responsive to wage changes. In a market with inelastic supply, unemployment is lower because workers are less responsive to wage changes.

Consider Two Labor Markets