In an economy with two distinct sectors,the imposition of a minimum wage above the competitive equilibrium wage in one of those sectors will NOT:
A) reduce the demand for labor in the minimum-wage sector.
B) cause workers to move to the non-minimum-wage sector.
C) increase employment in the non-minimum-wage sector.
D) decrease employment in the minimum-wage sector.
E) increase unemployment in the non-minimum-wage sector.

Question

Quizplus · Accepted Answer

Imposing a minimum wage above the competitive equilibrium in one sector typically does not increase unemployment in the other, non-minimum-wage sector. Instead, it might cause workers to move from the minimum-wage sector to the non-minimum-wage sector, potentially increasing unemployment in the minimum-wage sector and possibly increasing employment in the non-minimum-wage sector, depending on the demand for labor there.

In an Economy with Two Distinct Sectors,the Imposition of a Minimum