An increase in the minimum wage will tend to cause which of the following to occur?

A. a leftward shift in the demand for labor

B. a reduction in the unemployment rate

C. a rightward shift in the supply of labor

D. an increase in the size of the surplus of labor

The correct answer is D.

An increase in the minimum wage will tend to (D) cause an increase in the surplus of labor.

Surplus labor refers to the extra work or tasks that a particular individual has to do within a given period. An increase in the minimum wage will make employers reduce the labor quantities in their business or company to cover the added cost. A decline in demand for labor means that the employed individuals will have more tasks to perform within a given period since companies and businesses will tend to let go of some employees due to the increased labor cost.

An increase in minimum wages reduces the need for unskilled labor (hence increasing the unemployment rate since labor supply is higher than the demand for labor). An increase in minimum wages reduces labor demand, hence shifting the labor demand curve upwards and vice versa. The labor supply curve moves similarly to the law of supply. When wages are high, labor supply increases, hence shifting the labor supply curve upwards and vice versa.g