Other things equal, a big increase in the mimimum wage would cause the quantity demanded, but not eht demand, for unskilled labor to decrease. True, False, Uncertain, Explain
Take a shot.
Hint: a change in demand is a shift of the demand curve, a change in quantity demanded is a movement along the demand curve.
TRUE
To determine if the statement is true or not, we need to understand the difference between demand and quantity demanded.
Demand refers to the entire relationship between the price of a good or service and the quantity of it that consumers are willing and able to purchase at different prices, while quantity demanded refers to the specific quantity of a good or service that consumers are willing and able to buy at a given price.
Now, let's analyze the statement. It says that a big increase in the minimum wage would cause the quantity demanded, but not the demand, for unskilled labor to decrease.
This statement is true. If the minimum wage is increased significantly, it will lead to an increase in the cost of hiring unskilled labor. As a result, employers may decrease the quantity of unskilled labor they demand because they need to pay higher wages. This is represented as a movement along the demand curve.
However, the statement indicates that the increase in the minimum wage does not affect the overall demand for unskilled labor. The demand for unskilled labor is influenced by various factors other than just the price (wage). These factors include economic conditions, technological advancements, and the overall demand for goods and services produced by unskilled labor. A change in the minimum wage alone may not necessarily affect these factors, and therefore, would not shift the entire demand curve for unskilled labor.
Therefore, a big increase in the minimum wage would cause the quantity demanded (the specific quantity of unskilled labor demanded at a given wage) to decrease, but it would not affect the overall demand for unskilled labor.