A Legislated Minimum Wage

question 58

Multiple Choice

A legislated minimum wage

• A) will have the same wage and employment effects in competitive and monopsonistic labour markets.
• B) in a monopsonistic labour market, if binding, may increase wage rates but it must decrease employment.
• C) in a competitive labour market, if binding, may increase wages and will increase employment.
• D) will have no effect if the market is monopsonistic.
• E) in a monopsonistic labour market, if set equal to the competitive wage, will increase wages and employment.

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