-According to the above figure, if the government imposes a minimum wage equal to Wm, the effect will be
A) a reduction in employment from Qe to Qm.
B) an increase in employment from Qe to Qm.
C) a decrease in labor supplied, from C to E.
D) an increase in labor supplied, from A to E.

Question

-According to the above figure, if the government imposes a minimum wage equal to Wm, the effect will be
A) a reduction in employment from Qe to Qm. 
B) an increase in employment from Qe to Qm. 
C) a decrease in labor supplied, from C to E. 
D) an increase in labor supplied, from A to E.

Quizplus · Accepted Answer

Imposing a minimum wage above the equilibrium wage (Wm > We) leads to a surplus of labor because the quantity of labor supplied (Qs) at Wm exceeds the quantity of labor demanded (Qd). This results in a reduction in employment from the equilibrium quantity (Qe) to the quantity demanded at the minimum wage (Qm).

-According to the Above Figure, If the Government Imposes a Minimum