Question

A minimum wage increases unemployment by

A. decreasing the quantity of labor demanded.
B. shifting only the labor demand curve leftward.
C. shifting the labor supply curve rightward and shifting the labor demand curve leftward.
D. increasing the quantity of labor demanded.
E. shifting only the labor supply curve rightward.

Answer 1

A. decreasing the quantity of labor demanded. The minimum wage is an imposition to labor market that does not affect supply and demand functions (options b to e discarded).

Step-by-step explanation:

This imposition set a minimum level of wage not related to market price formation mechanism. When equilibrium wage is below of minimum wage salary, the unemployment appears as a consequence (because at minimum wage level the supply of labor surpasses the demand).