Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in
A) Little Rock and St. Louis.
B) only Raleigh.
C) Little Rock, St. Louis, and Raleigh.
D) only Little Rock.
E) St. Louis and Raleigh.

Question

Quizplus · Accepted Answer

An increase in the minimum wage to $7.50 will only cause unemployment in Little Rock where the current equilibrium wage is below $7.50. In St. Louis and Raleigh, the equilibrium wages are already at or above $7.50, so the minimum wage increase would not directly cause unemployment there.

Suppose the Current Equilibrium Wage Rate for Landscapers Is $6