It is generally accepted that a binding minimum wage does all of the following EXCEPT:
A)decrease the quantity of labor demanded.
B)increase unemployment.
C)increase the amount of labor supplied.
D)decrease the amount of labor supplied.

Question

Quizplus · Accepted Answer

A binding minimum wage would not decrease the amount of labor supplied, as workers would have an incentive to supply more labor at the higher wage rate. It would decrease the quantity of labor demanded by firms, which could lead to an increase in unemployment. Thus, options A and B are correct. However, option C is incorrect as a binding minimum wage would not increase the amount of labor supplied.

It Is Generally Accepted That a Binding Minimum Wage Does