Why do some workers lose their jobs when the minimum wage is increased?
A) The supply of labour decreases.
B) The demand for labour is perfectly elastic.
C) The increase in labour costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero.
D) The demand for labour is perfectly inelastic.
E) The increase in the minimum wage decreases the quantity of labour demanded.

Question

Quizplus · Accepted Answer

When the minimum wage is increased, the cost of hiring workers also increases. As a result, some employers may choose to reduce their workforce or cut back on hours for existing employees in order to keep labour costs manageable. This means that the quantity of labour demanded decreases, which can result in some workers losing their jobs.

Why Do Some Workers Lose Their Jobs When the Minimum