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microeconomics

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TRUE OR FALSE:


9. Assume that the Minimum Wage has increased to $14 from $10. If the total labour-income at the wage of $14 is higher than the total labour-income at the wage of $10, it means that the labour-demand with respect to wage is elastic.

FALSE.

I don't understand why this statement is false. If you minimum wage increase has caused and increase in the total labour income then does that not mean that increasing the minimum wage will result in more money for the firm? Would that mean that labour-supply is elastic and not labour-demand? I'm very confused. :S

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