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Economics (AS & A Level) · Oct / Nov 2025 · Paper 31 · Question 12

9708Labour market forces and government intervention

The diagram shows the effect of introducing an effective national minimum wage (NMW) in a labour market with a profit maximising monopsonist employer. What is the effect of the NMW on the deadweight welfare loss in this market?

  1. AIt falls from RST to UVT.
  2. BIt falls from RSVU to UVT.
  3. CIt rises from UVT to RST.
  4. DIt rises from UVT to RSVU.

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Correct answer: A. It falls from RST to UVT.

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