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c) What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither?d) If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wag…
c) An increase in minimum wage would increase unemployment because there would be a price floor(minimum wage) which causes more quantity supplied than demanded. The amount of unemployment does depend on both elasticities. The only way for unemployment not to rise with a minimum wage is if the minimum wage is non-binding, or if the…

ticities of both curves are perfectly inelastic. d)If the demand for unskilled labor were inelastic, the minimum wage would lower total wage payments. No the answer would not change if demand for unskilled labor were elastic.



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