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

Question

Quizplus · Accepted Answer

An increase in the minimum wage in the covered sector can lead to a surplus of labor (unemployment) in that sector, causing some workers to move to the uncovered sector, increasing labor supply there and potentially lowering wages.

If the Minimum Wage Applies to One Sector (The Covered