If the Minimum Wage Applies to One Sector (The Covered

question 11

Multiple Choice

If the minimum wage applies to one sector (the covered sector) but not another sector (the uncovered sector) , an increase in the minimum wage in the covered sector is likely to result in which of the following?

• A) greater employment in the covered sector
• B) less employment in the uncovered sector
• C) a lower wage in the covered sector
• D) a lower wage in the uncovered sector
• E) workers willingly leaving the covered sector for the uncovered sector in search of higher wages

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Definitions:

Market Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.

Competitive Industry

A sector of the marketplace characterized by numerous firms vying for market share, leading to benefits for consumers through innovation and lower prices.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices over a specific time period.

Indifference Principle

If an asset is mobile, then in long-run equilibrium, the asset will be indifferent about where it is used; that is, it will make the same profit no matter where it goes.