Answer to Question #303652 in Microeconomics for Sia

Question

Increase in minimum wage law how this effect would this increase have on unemployment does the change in unemployment depend on the elasticity of demand supply or both the elasticity is or neither

Answer 1

If firms' demand for labor is inelastic, an increase in the minimum wage will result in a relatively small reduction in employment. If firms' demand for labor is elastic, an increase in the minimum wage will result in a relatively small reduction in employment.