Question

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the
a. demand for bicycle assembly workers will increase.
b. supply of bicycles will shift to the right.
c. supply of bicycles will shift to the left.
d. firm must increase output to maintain profit levels.

Answer 1

Answer:

c. supply of bicycles will shift to the left.

Explanation:

If the minimum wage is increased, the cost of hiring labour increases and this increases the cost of production. The increase in the cost of production makes producers reduce supply in a bid to cut down cost.

A reduction in supply leads to a leftward shift of the supply curve.

I hope my answer helps you