An increase in the minimum wage will cause a relatively large increase in unemployment among ?
Correct answer: B. unskilled workers if the demand for labour is relatively elastic
- A. unskilled workers if the demand for labour is relatively inelastic
- B. unskilled workers if the demand for labour is relatively elastic
- C. skilled workers if the demand for labour is relatively elastic
- D. skilled workers if the demand for labour is relatively inelastic
Explanation
When labour demand is elastic, employers reduce employment substantially after the wage rises. Therefore, a minimum-wage increase produces the largest unemployment effect among unskilled workers when demand for their labour is elastic.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
Constrained choice is relevant for households ?
Assuming leisure is a normal good, if the income effect is greater than the substitution effect a wage increase ?
Assuming that leisure is a normal good. if an individual's labour supply curve is backward bending then the ?
The term 'rent' as it is used by economists. refers to ?
An unemployed salesperson has been offered a job paying Rs500 a week. He turns that job down and continues to search for another job that pays more. The cost of this continued search is ?
Differences in wages that result from differences in working conditions are known as ?