Figure 5.2. The figure shows the supply and demand curves of a firm.
-Which of the following is true with regard to minimum wages?
A)A minimum wage does little to alleviate poverty.
B)A minimum wage helps deal with the problem of poverty.
C)A minimum wage leads to a surplus or unemployment in the skilled labor market.
D)A minimum wage adversely affects the unskilled laborers between the age group 40 and 45.
E)A minimum wage helps provide employment to teenagers and improve their standard of living.

Question

​Figure 5.2. The figure shows the supply and demand curves of a firm. 
-Which of the following is true with regard to minimum wages?​
A)​A minimum wage does little to alleviate poverty. 
B)​A minimum wage helps deal with the problem of poverty. 
C)​A minimum wage leads to a surplus or unemployment in the skilled labor market. 
D)​A minimum wage adversely affects the unskilled laborers between the age group 40 and 45. 
E)​A minimum wage helps provide employment to teenagers and improve their standard of living.

Quizplus · Accepted Answer

The supply and demand curves in the figure do not show a significant impact of minimum wage on the firm. However, research suggests that minimum wage may not have a significant impact on poverty alleviation, as it may lead to higher unemployment and inflation, and may not target the most impoverished. Therefore, option A is the best choice as it correctly states that minimum wage does little to alleviate poverty. The other options are not supported by the information in the figure or are not accurate statements about the impact of minimum wage.

​Figure 52

Figure 52