An increase in the minimum wage:I). Will move employers down the labor demand curve, causing the quantity of labor demanded to fall.II). Is likely to increase the supply of labor, as more people will be willing to work for the higher wage.
Answer(s): D
Choice "d" is correct; neither statement I nor statement II are correct. Statement I is incorrect, as an increase in the minimum wage will move employers up, not down, the labor demand curve, causing the quantity of labor demanded to fall. Statement II is incorrect, as an increase in the minimum wage leads to a decrease in the quantity demanded of labor and an increase in the quantity supplied of labor. It does not increase the supply of labor, only the quantity supplied of labor.Choices "a", "b", and "c" are incorrect, per the above.
In a competitive market an increase in the minimum wage will likely have the following effects:
Answer(s): C
Choice "c" is correct. The general (or aggregate) demand for labor will remain unchanged; however, the quantity demanded will decrease.Choice "a" is incorrect, per Explanation for choice "c" above.Choices "b" and "d" are incorrect. The general (or aggregate) supply of labor will remain unchanged; however, the quantity supplied will increase.
An increase in the minimum wage will benefit specific economic wage groups as outlined below:I). Employees at the minimum wage rate who remain employed will benefit, since they will receive more money.II). Many of the unskilled could lose their jobs. There would be fewer jobs for the currently unemployed such as less educated and untrained personnel (e.g., teenagers) who will have more difficulty finding work as firms reduce their labor force and pursue more efficiency.
Answer(s): A
Choice "a" is correct. Only I.Choices "b", "c", and "d" are incorrect, since II is a disadvantage - not a benefit.
The movement along the demand curve from one price-quantity combination to another is called a(n):
Choice "c" is correct. References to the change in quantity demanded refer to a single demand curve, which is downward sloping to the right.Changes in the quantity demanded result from changes in price.Choices "a", "b", and "d" are incorrect. All refer to changes in the demand curve itself, like an outward shift from curve D - D to D1 - D1.
Post your Comments and Discuss AICPA CPA-Business exam with other Community members:
Venkatesh commented on September 08, 2023 I don't see Internal Control/Information technology related questions UNITED STATES upvote
Jay jain commented on May 25, 2023 This is nice platform Anonymous upvote
Our website is free, but we have to fight against bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CPA-Business content, but please register or login to continue.