Wonderland just raised its minimum wage (which was already above the market equilibrium level). What would...

Wonderland just raised its minimum wage (which was already above the market equilibrium level). What would happen to the employment in Wonderland?

1) More people will enter the job market (i.e., look for jobs), 2) employers will want to hire less workers, 3) unemployment level will increase.

1) More people will enter the job market (i.e., look for jobs), 2) employers will want to hire more workers, 3) unemployment level will increase.

1) Less people will look for jobs, 2) employers will want to hire less workers, 3) unemployment level will increase.

1) Less people will look for jobs, 2) employers will want to hire more workers, 3) unemployment level will decrease.

Expert Solution

1) More people will enter the job market (i.e., look for jobs), 2) employers will want to hire less workers, 3) unemployment level will increase.

Wonderland was already in the equilibrium level so basically the want of labor matched the want for jobs. However, now, when the Wonderland increases its wages above the market equilibrium, the labors may look more jobs owing to wages attraction in the market but the employers may not be in the position to grant the jobs thereby causing more unemployment in the market as the demand for employment shall surpass the want of the labors for the employment in the market.

keosha answered 2 years ago

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