Minimum wage laws can be expected to reduce employment:
A)when the specified minimum wage is greater than the equilibrium wage.
B)when the specified minimum wage is equal to the equilibrium wage.
C)when the specified minimum wage is smaller than the equilibrium wage.
D)only if unscrupulous employers exploit the monopoly power that the laws provide to them.
E)when any of the above applies depending upon other circumstances.

Question

Quizplus · Accepted Answer

If the specified minimum wage is greater than the equilibrium wage, employers may not be willing to hire as many workers at that higher wage rate, resulting in a decrease in employment. This is because the cost of hiring workers has increased beyond what employers are willing to pay.

Minimum Wage Laws Can Be Expected to Reduce Employment