Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The supply curve shifts left, leading to higher prices and lower quantities sold.
B
The supply curve shifts right, causing prices to decrease and quantities to increase.
C
The supply curve remains unchanged, as labor costs do not affect supply.
D
The demand curve shifts left, resulting in higher prices and quantities sold.
Understanding the Answer
Let's break down why this is correct
Answer
When the minimum wage increases, it raises the cost of hiring workers for fast-food chains. This means that the companies will find it more expensive to operate, leading them to supply less food at the same price. As a result, the supply curve shifts to the left, indicating a decrease in supply. For example, if a fast-food restaurant used to sell 100 burgers a day but now can only afford to sell 80 due to higher labor costs, this reduction in supply can lead to higher prices for burgers. Ultimately, this shift can create a new market equilibrium where prices are higher and fewer burgers are sold.
Detailed Explanation
When labor costs go up, it costs more for the fast-food chain to make food. Other options are incorrect because Some might think that higher costs would make businesses produce more to cover expenses; It's a common mistake to think that costs don't affect supply.
Key Concepts
Supply Curve Dynamics
Market Equilibrium
Labor Costs
Topic
Supply and Demand Interactions
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.