Answer to Question #24585 in Microeconomics for saad

Question

Let's assume that many of the workers in the silk shirt industry make the minimum wage. (Note: A minimum wage law sets a minimum acceptable wage for labor.) If the minimum wage is increased via this law, in the market for silk shirts we would expect:


A. P* up, Q* down


B. P* up, Q* up


C. P* down, Q* down


D. P* down, Q* up


E. A movement to the right along the supply curve.

Answer 1

C. P* down, Q* down, If minimum wage increases it will lead to increase of cost and increase of prices. Increase of prices will shift demand curve down