If the minimum wage was currently above the equilibrium wage, what would a decrease in the minimum wage do to the quantity demanded and quantity supplied of labour?
A) It would increase both the quantity demanded and the quantity supplied of labour.
B) It would decrease both the quantity demanded and the quantity supplied of labour.
C) It would increase the quantity of labour demanded and decrease the quantity supplied.
D) It would decrease the quantity of labour demanded and increase the quantity supplied.

Question

Quizplus · Accepted Answer

A decrease in the minimum wage, when it is above the equilibrium wage, would make hiring workers less expensive for employers, thus increasing the quantity of labor demanded. Conversely, it would make working less attractive to potential employees at the lower wage, thus decreasing the quantity of labor supplied.

If the Minimum Wage Was Currently Above the Equilibrium Wage