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AICPA CPA-Business Exam - Topic 3 Question 119 Discussion

In a competitive market an increase in the minimum wage will likely have the following effects:
C) The general (or aggregate) demand for labor will remain unchanged; however, the quantity demanded will decrease.
A) The general (or aggregate) demand for labor will increase; however, the quantity demanded will remain unchanged.
B) The general (or aggregate) supply of labor will increase; however, the quantity supplied will remain unchanged.
D) The general (or aggregate) supply of labor will remain unchanged; however, the quantity supplied will decrease.

AICPA CPA-Business Exam - Topic 3 Question 119 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 119
Topic #: 3
[All CPA-Business Questions]

In a competitive market an increase in the minimum wage will likely have the following effects:

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'c' is correct. The general (or aggregate) demand for labor will remain unchanged; however, the quantity demanded will decrease.

Choice 'a' is incorrect, per Explanation: for choice 'c' above.

Choices 'b' and 'd' are incorrect. The general (or aggregate) supply of labor will remain unchanged; however, the quantity supplied will increase.


by Leatha at Nov 19, 2025, 03:49 AM

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Jesusa
3 months ago
D could happen too. If wages rise, some might not want to work at all.
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Juliann
3 months ago
I lean towards B. More people would supply labor with higher wages.
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Deonna
3 months ago
True, but A says demand increases, which feels off to me.
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Kristin
3 months ago
But what about A? More people might want jobs if wages rise.
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Gabriele
3 months ago
I agree, C seems right. Employers might hire fewer workers.
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Nida
3 months ago
Totally agree with A), more demand for labor is expected!
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Helga
4 months ago
D) is unlikely, supply usually increases with higher wages.
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Marg
4 months ago
Surprised to see B) listed, isn't that counterintuitive?
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Darrin
4 months ago
A) makes sense, higher wages attract more workers.
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Werner
5 months ago
Haha, this question is a piece of cake. C is the way to go, my friends.
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Wei
5 months ago
C) The answer is C. Unless you're living under a rock, this is basic stuff.
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Lon
5 months ago
The answer is C, duh. Anyone who's taken Econ 101 knows that.
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Albina
5 months ago
C) The correct answer is C. Minimum wage increases reduce the quantity of labor demanded, but don't affect the overall demand.
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Caitlin
5 months ago
Hmm, I'm torn between B and C. But I think C makes the most sense.
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Aleta
5 months ago
This is a classic economics question. I'm pretty sure the answer is C.
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Elfrieda
6 months ago
C) The general (or aggregate) demand for labor will remain unchanged; however, the quantity demanded will decrease.
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Gene
6 months ago
I feel like the supply of labor would increase with higher wages, but I'm not clear on how that impacts the quantity supplied.
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Renay
6 months ago
If I remember correctly, higher minimum wage could lead to a decrease in quantity demanded, but I'm confused about how that affects overall demand.
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Gary
6 months ago
I think we practiced a question similar to this where the demand for labor decreased with higher wages, but I can't recall the exact reasoning behind it.
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Larae
6 months ago
I'm feeling pretty confident about this one. The key is understanding that the minimum wage affects the supply and demand curves differently. I'll work through it step-by-step.
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Rodolfo
6 months ago
I've got this! An increase in the minimum wage will decrease the quantity of labor demanded, so the answer is C. Easy peasy.
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Darnell
7 months ago
Hmm, this is tricky. I'm a little confused about the difference between "general/aggregate" and "quantity" in the answer choices. I'll have to re-read the question closely.
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Timothy
7 months ago
I think option C makes sense. Higher wages might reduce demand for labor.
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Charisse
7 months ago
I disagree, C) seems more accurate, demand will drop.
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Nu
7 months ago
I remember discussing how an increase in minimum wage might lead to higher labor supply, but I'm not sure if that means demand stays the same.
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Lucina
8 months ago
Okay, this looks like a classic supply and demand question. I just need to remember how an increase in the minimum wage affects the labor market.
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Gearldine
8 months ago
I think I know the basic concepts here, but I'm not totally sure how to apply them to this specific question. I'll need to think it through carefully.
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Jacquelyne
15 days ago
True, but if wages rise, wouldn’t that attract more workers overall?
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Dottie
2 months ago
I’m leaning towards option D. Higher wages might scare off some employers.
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Shaniqua
2 months ago
Exactly! So maybe option C is right. Demand could drop if businesses can't afford it.
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Argelia
2 months ago
But wouldn’t that just mean more competition for the same jobs?
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Carman
7 months ago
I feel like option A makes sense. More people might want jobs if wages go up.
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