Question

A midyear burst of​ minimum-wage increases starts on July 1

On July​ 1, 2016, the minimum wage will increase in 14 U.S.​ cities, states and​ counties, and in the District of Columbia. In San​Francisco, the minimum wage will rise to​ $13.00 by 2018.
​Source: The Wall Street Journal​, July​ 1, 2016
The rise in the minimum wage​ _______.
A. increases aggregate supply because when workers receive a higher wage​ rate, they work harder
B. decreases aggregate supply because​ firms' costs increase
C. creates a movement up along the aggregate supply curve because the price level rises
D. does not change aggregate supply because most people earn more than the minimum wage

Answer 1

Answer: B. decreases aggregate supply because​ firms' costs increase

Step-by-step explanation:

The rise in the the minimum wage rate raise the production cost .

This tends to shift the aggregate supply curve leftwards because the profit margins of firm will decrease and that tends to decrease the production.( at each unite of production.)

Hence, the rise in the minimum wage​ decreases aggregate supply because​ firms' costs increase .

Therefore , the correct option is 'B'.