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If the government imposed a legal minimum wage that was above the market equilibrium wage, the resulting unemployment would be the greatest when:
Suggested Answer: B
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4 comments · newest first
RE
Rene
39 minutes ago
This is tricky! I remember something about inelastic supply leading to less unemployment, but I can't recall how that applies here. Maybe A is the answer?
HE
Herman
5 days ago
I practiced a similar question where the focus was on how elasticities affect employment. I think D might be the answer since inelastic demand means firms need workers regardless of wage increases.
ET
Ethan
10 days ago
I'm not entirely sure, but I feel like if demand is inelastic, firms won't reduce hiring much even if wages go up. Could that mean C is correct?
LA
Laquita
16 days ago
I think I remember that when both demand and supply are elastic, changes in price lead to larger changes in quantity. So maybe B is the right choice?