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Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day,but a minimum wage of $130 a day for bricklayers is set by the government.As a result:
A) 6 workers will now be hired by the firm.
B) 3 workers who would have been employed at the previous $100 market wage are now unemployed.
C) all bricklayers are better off.
D) construction firms will shut down.

Question

Use the following to answer questions :
Figure: The Demand for Bricklayers 
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day,but a minimum wage of $130 a day for bricklayers is set by the government.As a result:
A) 6 workers will now be hired by the firm. 
B) 3 workers who would have been employed at the previous $100 market wage are now unemployed. 
C) all bricklayers are better off. 
D) construction firms will shut down.

Quizplus · Accepted Answer

Setting a minimum wage above the equilibrium wage will lead to a decrease in the demand for bricklayers, as firms will not be willing or able to hire as many workers at the higher wage. This will result in some of the previously employed workers becoming unemployed, which is represented by the decrease in quantity demanded from Q1 to Q2 in the graph. Even though the remaining employed workers are now receiving a higher wage, some workers are worse off due to losing their job. Therefore, not all bricklayers are better off. The option of construction firms shutting down is extreme and unlikely to happen in the short run. Option A is incorrect because the quantity supplied at the new higher wage will be lower than before, leading to fewer workers being hired.

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