Which of the following statements is most accurate regarding who benefits and loses from establishment of a minimum wage above the market clearing wage?
A) Individuals who obtain jobs benefit because they earn a higher wage, but some individuals lose because employers will not hire them at the minimum wage.
B) All workers benefit equally from the establishment of the minimum wage because just as many workers as before remain employed, and all earn the higher minimum wage.
C) All employers benefit equally from the establishment of the minimum wage because they are able to hire fewer workers at a lower wage.
D) All employers lose because they must pay the higher minimum wage to the same number of employees as they did before the minimum wage was established.

Question

Quizplus · Accepted Answer

While some individuals benefit from earning a higher wage due to the minimum wage increase, others may lose job opportunities because employers may not be able to hire as many workers at the higher wage. The minimum wage can increase the cost of labor for employers, leading them to hire fewer workers or substitute automation for labor. Therefore, the impact of minimum wage increase is not uniformly positive for all individuals or businesses.

Which of the Following Statements Is Most Accurate Regarding Who