If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?
A) an increase in quantity of unskilled labor demanded
B) a decrease in the quantity of unskilled labor supplied
C) a shortage of unskilled labor
D) a surplus of unskilled labor (unemployment)

Question

Quizplus · Accepted Answer

When the minimum wage is set above the market equilibrium, it results in a higher wage than what the market would naturally set. This leads to a surplus of unskilled labor because employers demand less labor at the higher wage, while more workers are willing to work at this higher wage, resulting in unemployment.

If an Increase in the Government-Imposed Minimum Wage Pushes the Price