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Economics · Oct / Nov 2017 · Paper 12 · Question 11

2281Workers

The diagram shows two curves. One is the demand for labour, the other is the supply of labour. A government fixes a minimum wage (M_W) that must be paid by employers. What will be the effect of this minimum wage?

  1. Afewer workers will be employed
  2. Bno change in the market equilibrium
  3. Cno worker will be paid wage W
  4. Dsupply of labour will exceed demand

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Correct answer: B. no change in the market equilibrium

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