O-LevelEconomicsMicroeconomic decision makers2281/12 · May/June 2015 · Q101 Mark

A trade union and employers agree a minimum wage (W₁) which is above the market equilibrium wage (W) for that industry. [Figure 10.1] What is the effect of paying the minimum wage (W₁)?

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Ademand for workers will exceed the supply

Bfewer workers will be employed

Csome workers will continue to be paid at wage W

Dworkers will be less willing to work for the minimum wage

✓ Correct answer

B: fewer workers will be employed

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Topic: Microeconomic decision makers, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2015 Paper 1 Variant 2, question 10.

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