A decrease in the current minimum wage would:
A)decrease employment for low skill workers.
B)increase firm's demand curves for low skill workers.
C)increase the supply of low skill workers.
D)decrease the incomes of some low skill workers.

Question

A decrease in the current minimum wage would:
A)​decrease employment for low skill workers.
B)​increase firm's demand curves for low skill workers.
C)​increase the supply of low skill workers.
D)​decrease the incomes of some low skill workers.

Quizplus · Accepted Answer

A decrease in the current minimum wage would lead to lower incomes for some low skill workers who earn the minimum wage or slightly above it. It may also encourage firms to hire more low skill workers as their wages are now lower, but this effect may be small and may not offset the negative impact on the income of affected workers. It is unlikely to increase the supply of low skill workers as wages are determined by the interaction of supply and demand, and a decrease in wages will not increase the willingness of people to work in low wage jobs. Moreover, a decrease in the minimum wage may reduce the overall demand for goods and services as workers have less disposable income to spend, which may further reduce employment prospects for low skill workers.

A Decrease in the Current Minimum Wage Would