Economics 9708 · AS & A Level · Long-run costs and economies of scale

Long-run costs and economies of scale — practice question

A country sets a national minimum wage (NMW) at $10 per hour. In which industry would the NMW most likely create the highest level of unemployment?

  • Aequilibrium wage rate before NMW ($ per hour) = 8; wage elasticity of demand for labour >1; wage elasticity of supply of labour >1
  • Bequilibrium wage rate before NMW ($ per hour) = 8; wage elasticity of demand for labour <1; wage elasticity of supply of labour <1
  • Cequilibrium wage rate before NMW ($ per hour) = 9; wage elasticity of demand for labour >1; wage elasticity of supply of labour >1
  • Dequilibrium wage rate before NMW ($ per hour) = 10; wage elasticity of demand for labour >1; wage elasticity of supply of labour >1

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