Lesson 4.1.6.6

4.1.6.6 The National Minimum Wage Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.1.6.6, The National Minimum Wage: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. What is a national minimum wage legally classified as?

    • Tax threshold
    • Shadow price
    • Wage ceiling
    • Wage floor

  2. In a competitive labour market, a minimum wage set above equilibrium causes:

    • Unemployment
    • Lower wages
    • Increased employment
    • Labour shortages

  3. What is a key benefit of introducing a national minimum wage?

    • Increased wage differentials
    • Higher inflation
    • Lower consumption
    • Poverty reduction

  4. What is a potential disadvantage for firms following a national minimum wage increase?

    • Increased product demand
    • Higher labour productivity
    • Higher labour costs
    • Lower inflation rates

  5. If a minimum wage is set above the monopsony wage but below MRP, employment will:

    • Drop to zero
    • Fall
    • Rise
    • Remain unchanged

  6. If a minimum wage creates excess supply of labour, what market outcome occurs?

    • Structural deficit
    • Market equilibrium
    • Real wage unemployment
    • Labour shortage

  7. Which group of workers is most directly affected by an increase in the minimum wage?

    • Tenured professionals
    • High-income earners
    • Salaried managers
    • Low-skilled workers

  8. When labour demand is price inelastic, an increase in the minimum wage causes job losses to be:

    • Zero initially
    • Relatively small
    • Infinitely high
    • Relatively large

  9. If a 10% wage increase reduces employment by 2%, what is the elasticity of employment?

    • -0.5
    • -0.2
    • -2.0
    • -5.0

  10. Why can a minimum wage improve market efficiency in a monopsony labour market?

    • Creates excess supply
    • Increases deadweight loss
    • Corrects market failure
    • Reduces total surplus

  11. For workers remaining in employment, what is the main benefit of a minimum wage increase?

    • Higher tax burdens
    • Higher living standards
    • Fewer job hours
    • Lower nominal pay

  12. The overall impact of a national minimum wage on employment levels depends heavily on:

    • Government spending levels
    • Labour demand elasticity
    • Corporate tax rates
    • Exchange rate movements

  13. How can firms reduce labour costs following a minimum wage rise without firing staff?

    • Cutting working hours
    • Lowering prices
    • Raising wage rates
    • Increasing hiring

  14. In economics, a national minimum wage is an example of what?

    • A supply quota
    • A tax credit
    • A price floor
    • A price ceiling

  15. Introducing a binding minimum wage in a monopsony labour market usually has what effect on employment?

    • It decreases
    • It increases
    • It stays zero
    • It doubles instantly

  16. What determines whether a minimum wage increase improves total worker welfare?

    • Inflation targets
    • Firm ownership structure
    • Tax rate changes
    • Pay versus hours

  17. What is a primary disadvantage of a national minimum wage for employers?

    • Higher labour costs
    • Reduced capital investment
    • Lower production costs
    • Increased worker turnover

  18. In a competitive labour market, a minimum wage set above equilibrium creates what?

    • Market equilibrium
    • Excess labour supply
    • Excess labour demand
    • A labour shortage

  19. Why do employment effects of a minimum wage vary between different economic sectors?

    • Income tax rates
    • Central bank policy
    • Labour demand elasticity
    • Exchange rate changes

  20. Replacing labour with technology after a minimum wage increase is known as what?

    • Wage discrimination
    • Monopsony power
    • Capital substitution
    • Labour intensive growth

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