In a Particular Labor Market, the Demand for Labor Is

question 350

Multiple Choice

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100) L, and the supply of labor is given by W = 4 + (1 / 100) L, where W is the wage rate, and L is the number of workers. Suppose government decides to impose a minimum wage of $15. The wage will:

• A)have no effect, since it is below the equilibrium wage.
• B)cause a shortage of workers, since it is above the equilibrium wage.
• C)cause a surplus of workers, since it is above the equilibrium wage.
• D)result in increases in wages for workers who were employed at the equilibrium wage only.

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