Explain why each of the following statements is True, False, or Uncertain accord

Question

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important.

A3-7. An increase in the minimum wage will have no effect on either firm-level or industry level supply curves for competitive industries that hire minimum wage labour, so prices will be unaffected in these markets in both the short and long run. [Hint: Assume the industry is composed of identical firms.]

Explanation / Answer

False, an increase in minimum wage would attract many labours, the firm or industry would have the luxury to chose the best, and most skilled amongst them. This change of better labour would increase firm prouductivity and its quality of output and it's market position would rise.

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