Question

The imposition of a binding (effective) minimum wage above the equilibrium wage in the unskilled labor market will
(x) reduce the number of unskilled persons employed because of a decrease in the quantity supplied of labor
(y) increase the unemployment rate because of a decrease in the quantity demanded of labor
(z) reduce employment of unskilled persons because of a decrease in the quantity demanded of labor.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

Which of the following statements about minimum wage laws is (are) correct?
(x) The imposition of effective (binding) minimum wage laws mainly affect unskilled workers, probably increase teenage unemployment and are usually a cause of structural unemployment.
(y) Workers with high skills and much experience are usually not affected by the minimum wage because their equilibrium wages are well above the minimum wage.
(z) If the minimum wage is below the equilibrium wage, then the quantity demanded of labor at the minimum wage will be more than the quantity supplied of labor and the wage rate will rise since it is legally allowed to reach the equilibrium.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Answer 1

age reate Ques. | Minimum wage is the wager which is set above the equilibrium wage rate. бас- dite smimage Surplus / wage otyon og O* o labor Effective minimum wage means minimum wage is set above the equilibrium wage I. option is correct This is because as govemment limpose effective minimum wage As shown in the Diagram, at minimum wage Cam)

abor Supply 7 labo Demand The refone ② unemployment sale Increases because of decrease in Demand for Jabar | due to high wage) Hence (9 and 6 is correct quos option is correct As due to effective minimum wage unemployment increases mainly lin unskilled workers, probably Increase Unemployment and cause of structural unemployment I workers with high skills and much freperience are usually not affected by the equilibrium wages hence this is correct 1 when minimum wage is ser below! equilibrium then d > wage will increase reach to equilibrium and hence A is correct

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