Asked by Nitin Bhogaraju on Jul 07, 2024
Verified
Refer to Figure 20-4. If the government imposes a minimum wage above W0, it is likely to
A) increase employment to a level above L0.
B) reduce employment to a level below L0.
C) provide more income to the working poor than they collectively received before the minimum wage was set.
D) have no effect on employment.
Minimum Wage
The lowest wage rate that employers can legally pay their workers, established by government regulation.
Employment Level
A measure indicating the number of people currently employed in an economy, typically not including those self-employed.
Working Poor
Individuals who have employment but whose incomes fall below a specific poverty line due to low wages and insufficient hours.
- Comprehend the critiques and justifications of minimum wage legislation and additional mechanisms for income support.
Verified Answer
HH
Hannah HolderJul 11, 2024
Final Answer :
B
Explanation :
Imposing a minimum wage above the equilibrium level (W0) creates a surplus of labor, as the quantity of labor supplied exceeds the quantity of labor demanded, leading to a reduction in employment below the equilibrium level (L0).
Learning Objectives
- Comprehend the critiques and justifications of minimum wage legislation and additional mechanisms for income support.