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which one is correct and why Suppose town A has a more inelastic demand for labour than town B, but the supply of labour is

which one is correct and why

Suppose town A has a more inelastic demand for labour than town B, but the supply of labour is similar in both places . Both economies initially have some structural unemployment.An increase in the minimum wage will:

  1. lead to a smaller reduction in employment in economy A than B, and lower unemployment
  2. lead to a smaller reduction in employment in economy A than B, but higher unemployment.
  3. lead to a larger reduction in employment in economy A than B, but lower unemployment
  4. lead to a larger reduction in employment in economy A than B, but higher unemployment.
  5. Nothing will happen to employment in either city as the minimum wage is lower than the equilibrium wage.

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