Economics · May / June 2016 · Paper 12 · Question 10

In the diagram, D₁D₁ and S₁S₁ represent the demand for and the supply of labour. W indicates a legal minimum wage. An influx of immigrant labour causes the supply curve for labour to shift from S₁S₁ to S₂S₂. [diagram: labour market with wage ($) on vertical axis and labour (millions) 0–10 on horizontal axis; demand curve D₁D₁ downward sloping, supply curves S₁S₁ and S₂S₂ upward sloping, legal minimum wage W shown as horizontal dashed line] How many people will be employed if the minimum wage legislation is then abolished?

1. A4 million
2. B5 million
3. C6 million
4. D7 million

As printed in the paper