How Would Imposing a Minimum Wage Above the Market-Clearing Wage

question 5

Multiple Choice

How would imposing a minimum wage above the market-clearing wage affect employment in a competitive labor market?

• A) Employment would increase as previously unemployed workers would be more encouraged to find a job.
• B) Employment would increase because a higher minimum wage would create more jobs for low-skilled workers.
• C) Employment would increase as firms would illegally hire workers below the original competitive wage.
• D) Employment would be unchanged as workers are nonresponsive to low wages.
• E) Employment would decrease as some workers who are willing to work at the lower competitive wage would no longer be able to find work.

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Definitions:

Outsources

Outsourcing involves contracting out certain business processes or tasks to external providers, often to reduce costs and improve efficiency.

Competency

A combination of skills, knowledge, and behavior that contributes to an individual's ability to perform tasks effectively.

Headcount

The total number of individuals employed by an organization, including all full-time and part-time staff.

Head Office

The primary office or headquarters where the key administrative activities of an organization are conducted.